Magnolia LNG

Magnolia LNG is a proposed liquefied natural gas export terminal planned near Lake Charles. 

The future of a proposed liquefied natural gas export terminal near Lake Charles appears bleak after the parent company appointed administrators who are tasked to deal with potential insolvency.

In Australia, where LNG Ltd. is headquartered, administration is akin to Chapter 11 bankruptcy reorganization in the United States. It remains unclear whether the company will restructure and continue to pursue its Louisiana LNG project. The administrators did not respond to requests for comment.

Demand for LNG has slowed while oil prices have dropped significantly in recent months. The company said it was unable to secure customer contracts, especially after the coronavirus pandemic began several months ago.

PricewaterhouseCoopers was appointed as the voluntary administrators in late April. The company's CEO and several other executives resigned from their posts shortly before. PwC is reviewing the company's finances and will be contacting its creditors soon. 

LNG Ltd. had proposed building Magnolia LNG in Louisiana. It was slated to be taken private by Singapore-based LNG9 PTE Ltd. in a $75 million deal, but investors withdrew their bid after an initial loan fell through.

LNG Ltd. was on track to run out of money in May and had only $8.3 million left in cash as of December 2019. 

It received a Paycheck Protection Program loan from the U.S. Small Business Association totaling $388,552 in recent weeks.

Magnolia LNG was expected to export 8.8 million tons of LNG each year, but has not started construction. The project already has permits from the Federal Energy Regulatory Commission.

Magnolia LNG isn't the only project facing issues in Louisiana. Shell dropped out of Lake Charles LNG, citing market conditions, and the project was downsized. Some economists predict that the natural gas market may diminish while crude oil prices remain low because in some overseas markets the price of LNG is tied to oil.

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