Lifeline for Korean shipyards could keep U.S. project afloat

Energywire | June 17, 2016 | Jenny Mandel

An early-stage proposal to float a liquefied natural gas export terminal off the Louisiana coastline is on track to get major financing despite an industry-wide slowdown.

Early this week, news reports surfaced that Delfin LNG, a project proposing to operate a state-of-the-art floating gas liquefaction unit in the Gulf of Mexico, had secured a $1.5 billion loan. The lender was reported to be the Korea Development Bank (KDB), a state-owned investor that supports Korean industries and interests.

Such a strong show of financial support would be big news for a project that aims to deploy an unproven technology during uncertain times for a troubled industry. Natural gas prices that hovered above $15 per million British thermal units (Btu) for spot cargoes to Korea just two years ago are now selling below $5 per million Btu. The oil price collapse, a surge of new U.S. and Australian LNG supply, and a dramatic slowdown in the Chinese economic growth engine have conspired to dramatically cut prices (EnergyWire, April 27, 2015).

On Wednesday, a New York-based official with Korea's KDB said a loan had not been provided, but she confirmed that the bank has signed on as a financial adviser in a step that could lead to lending. "The Seoul headquarters was appointed as financial advisory bank. That's all I can tell you right now," said Sehee Hwang, KDB's vice president of New York project finance, adding that, "At some point the bank will provide a loan."

The Delfin project is being developed by a subsidiary of Fairwood Peninsula Energy Corp., a venture made up of the Fairwood Group, which is based in India and Singapore, and the Texas-based Peninsula Group, which invests in land development, construction and oil and gas projects.

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