Freeport LNG Expansion LP has struck two binding 20-year liquefaction tolling agreements (LTA) for its proposed natural gas liquefaction and loading facility on Quintana Island near Freeport, TX. The separate agreements are with SK E&S LNG LLC (SK) and Toshiba Corp., each for a base quantity of 2.2. million tons per annum (mtpa).

Each of the agreements is to begin upon completion of the third liquefaction train at Quintana Island. The SK LTA is guaranteed by SK parent companies SK E&S Co. Ltd. and SK Holdings Co. Ltd.

“SK’s strong market of 3.5 million South Korean customers adds another highly experienced LNG industry participant to our already strong customer base,” said Freeport LNG CEO Michael Smith. “With our separate announcement today of entry into an LTA with Toshiba Corp., Freeport LNG is positioned to close financing and commence construction of the third train in late 2014.

“The SK agreement provides a unique opportunity for the United States to support our key ally and free trade partner, South Korea, SK’s primary market for the LNG received from the Freeport project.”

SK USA Inc. President Shaun Parvez said the agreement builds upon SK’s 20-plus year experience in the U.S. market “and sets the stage for continued investment by SK in the United States.”

Yasuharu Igarashi, CEO of Toshiba Corp. Power Systems Co. said, “We hope our participation [in the Freeport project] will contribute to the value improvement at our client companies and efficient generation of energy in Japan.”

Freeport LNG previously announced the execution of LTAs with Osaka Gas Co. Ltd. (Osaka Gas) and Chubu Electric Power Co. (Chubu Electric), each for 2.2 mtpa, and with BP Energy Co. (BP), for 4.4 mtpa (see Daily GPI, Feb. 12). The Osaka Gas and Chubu Electric LTAs commence upon completion of construction of the initial liquefaction train, and the BP LTA commences upon completion of construction of the second train.

“Adding SK and Toshiba to our existing customer base of Osaka Gas and Chubu Electric, two of the largest natural gas and electric utility service providers in Japan, and BP, one of the world’s leading international oil and gas companies, further enhances the strength of our project and the best-in-class suite of counterparties to support financing,” said Smith. “We intend to close financing and commence construction on the initial two liquefaction trains in early 2014 upon receipt of regulatory approvals. Financing and commencement of construction on the third liquefaction train is expected in the second half of 2014.”

Freeport LNG still needs authorization from the U.S. Federal Energy Regulatory Commission, expected in the first quarter, to begin project construction. The first train is anticipated to commence operations 42-48 months from start of construction, with the second train in operation six to nine months after the first. Construction of the third train is anticipated to begin in late 2014, and to commence operations six to nine months after the second train.

The company has received authorization from the U.S. Department of Energy (DOE) to export the entire LNG production volume of the initial two trains to free trade agreement (FTA) countries. Freeport LNG’s application to export up to two additional trains of production volume to non-FTA countries remains pending with the DOE and is currently second in the queue for review, according to the company (see Daily GPI, Aug. 8).