LNG Ltd. inked a multimillion-dollar deal on May 11 for the sale of its Magnolia LNG project being developed in Lake Charles, La., as the Australian company struggles to stay afloat.

Global Energy Megatrend Ltd., which is incorporated in London but headquartered in Lafayette, La., agreed to pay LNG Ltd. $2.25 million for the undeveloped Magnolia LNG project. The transaction includes the transfer of 16 employees, patents and project debt.

LNG Ltd., which is currently facing a possible restructuring, said it will retain its Bear Head LNG project in Canada. The sale, slated to close May 15, comes roughly a month after a deal for the acquisition of LNG Ltd. and all of its assets by a Singapore-based company fell apart.

The Magnolia LNG project has received full permitting and regulatory approval to develop an 8 million tonnes per annum LNG export terminal in Lake Charles. However, LNG Ltd. still has yet to reach a final investment decision (FID) on the project.

Triggered by the effect of the COVID-19 pandemic on the global economy, LNG developers could start postponing FIDs as they start relooking at their strategies and capex plans for 2020, according to a recent report by London-based data and analytics company GlobalData Plc.

“The global LNG sector was already witnessing an LNG supply glut and weak demand before the outbreak of COVID-19,” Soorya Tejomoortula, oil and gas analyst at GlobalData, said in the report published on May 12. “The fall in gas prices and further weakening of LNG demand after the COVID-19 outbreak has accelerated this trend.”

Tejomoortula added that the sector has seen a structural shift of LNG buyers favoring short-term contracts with smaller volumes, which could also increase the risk of FID delays and project cancellations as developers typically rely on long-term contracts to secure financing for projects.

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