LNG Ltd Looks for New Partners After Takeover Bid Withdrawn

(Reuters) - Liquefied Natural Gas Ltd said on Tuesday it is negotiating with other parties and has enough money to keep operating until May after Singapore-based LNG9 withdrew its takeover bid because the financing fell through:

Rendering of the Magnolia LNG project. (image: LNG Ltd)

LNG Ltd is one of several companies developing North American LNG export plants that have delayed projects as global gas prices dropped to their lowest in years in an oversupplied market in 2019, and plunged to record lows in 2020 as the coronavirus outbreak caused demand to collapse.

Houston-based LNG Ltd said it still remains engaged with LNG9 even as its is negotiating with other parties. Shares of LNG Ltd tumbled as much as 56.5% to a record low A$0.050.

In early 2019, LNG Ltd said it planned to make a final investment decision (FID) to build its proposed $4.4 billion, 1.2 Bcfd Magnolia export plant in Louisiana. By late 2019, however, LNG Ltd, like many other developers, pushed its FID plans back to 2020.

Now that coronavirus-related demand destruction has caused most LNG developers to delay projects, LNG Ltd is no longer saying when it may make a FID on Magnolia as it seeks partners so it can continue developing its projects.

LNG Ltd is also developing the Bear Head export plant in the Canadian province of Nova Scotia.

In mid-2019, a dozen North American developers, including LNG Ltd, said they planned to make FIDs to build new projects by the end of the year. None of those projects are under construction. All of those FIDs were delayed until 2020 or later.

At the start of 2020, another dozen developers - some from 2019 - said they planned to make FIDs by the end of this year. Currently, however, that total is down to around half a dozen, and analysts said they expect just one or two of those projects to go forward this year.

In total, energy firms are developing over 50 bcfd of new export capacity in North America. If built, those plants would consume more than half the gas produced in the United States.

In reality, analysts expect U.S. LNG capacity will only rise to around 15 bcfd by 2025, up from 8 bcfd operating now and another 6 bcfd already under construction.

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