Exmar, PEP cancel Caribbean FLNG deal

Exmar of Belgium said it has terminated the agreement with Pacific Exploration and Production executed in March 2012 for the deployment of the Caribbean FLNG in Colombia.

The deal was set to begin upon delivery of Exmar’s Caribbean FLNG unit, currently under construction at the Wison shipyard in Nantong, China, the company said in a statement on Tuesday.

The Caribbean FLNG, with a 16,100 cbm storage capacity was to be delivered off the Columbian coast in 2015 and connected to La Creciente Field in Northern Colombia where it would have produced 0.5 mtpa of LNG per year for export.

However, In January 2015, the start-up of the project was delayed.

In its latest statement, Exmar informed that due to the effects of the domestic natural gas market conditions and the global conditions in the LNG market and changes since executing the tolling agreement, setting up the liquefaction project in Colombia was no longer economically viable for PEP.

Under the settlement agreement, PEP will pay a termination fee to Exmar in monthly installments from March 2016 to June 2017.

Exmar is already negotiating new employment options for the Caribean FLNG that is set for delivery in the second quarter 2016.