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Pieridae says KBR will not provide fixed-cost contract for Nova Scotia LNG plant

07/13/2020 | 02:48pm EST

Pieridae Energy Ltd said on Monday that KBR Inc will not provide a fixed-cost contract to build the Canadian energy firm's proposed Goldboro liquefied natural gas (LNG) export plant in Nova Scotia, and Pieridae said it is exploring its legal options.

Pieridae Energy Ltd said on Monday that KBR Inc will not provide a fixed-cost contract to build the Canadian energy firm's proposed Goldboro liquefied natural gas (LNG) export plant in Nova Scotia, and Pieridae said it is exploring its legal options.

Pieridae in April had delayed making a final investment decision to build the $10 billion project until after Sept. 30 as government efforts to curb the coronavirus outbreak cut global economic growth and energy demand.

In June, KBR, a U.S.-based engineering firm, said it planned to exit most LNG and other energy projects.

"We are looking at all of our options, including discussing the matter with legal counsel to determine the most appropriate next steps," Pieridae's chief executive, Alfred Sorensen, said in a statement.

"KBR's decision to no longer provide a fixed-price contract is in apparent contravention of its obligation under the terms of a signed services agreement dated March 27, 2019," Pieridae said.

Officials at KBR were not immediately available for comment.

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

Goldboro is designed to produce almost 10 million tonnes per annum (MTPA) of LNG, or about 1.3 billion cubic feet per day (bcfd) of natural gas.

Pieridae has a 20-year agreement to sell all of the LNG from the first liquefaction train at Goldboro - about 5 MTPA - to German utility Uniper SE starting between Nov. 30, 2024 and May 31, 2025.

Pieridae said Uniper has agreed to extend the FID deadline to June 30, 2021.

Pieridae said it expects construction to take about 56 months.

(Reporting by Scott DiSavino)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
KBR, INC. -0.88% 31.53 Delayed Quote.1.94%
PIERIDAE ENERGY LIMITED 5.36% 0.59 Delayed Quote.24.21%
UNIPER SE -3.73% 29.98 Delayed Quote.6.16%
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