Summary
Cheniere Energy, Inc. (LNG) has filed an 8-K report detailing a significant material definitive agreement entered into by its wholly-owned subsidiary, Cheniere Sabine Pass Pipeline Company. This agreement, effective February 1, 2006, is for Engineering, Procurement, and Construction (EPC) services with Willbros Engineers, Inc. for a crucial 16-mile, 42-inch pipeline and associated facilities. This pipeline will connect Cheniere's liquefied natural gas (LNG) terminal under construction at Sabine Pass to a pipeline interconnect at Johnson's Bayou, Louisiana. The EPC agreement outlines a comprehensive scope of work for Willbros, including project management, engineering, procurement, construction, and construction management. Key milestones are established, with material receipt and ware yard preparation not commencing before January 1, 2007, and physical construction beginning no earlier than April 1, 2007. The project is targeted for mechanical completion by September 30, 2007. The total contract price is capped at approximately $67.7 million, excluding certain sales and use taxes that Cheniere will reimburse. The agreement includes detailed provisions for change orders, warranties, termination rights for both convenience and default, and force majeure events, providing a structured framework for this critical infrastructure development.
Key Highlights
- 1Cheniere Sabine Pass Pipeline Company, a subsidiary of Cheniere Energy, Inc., entered into a material EPC agreement with Willbros Engineers, Inc. on February 21, 2006.
- 2The agreement covers engineering, procurement, and construction services for a 16-mile, 42-inch pipeline and related facilities connecting the Sabine Pass LNG terminal to Johnson's Bayou, Louisiana.
- 3The total contract price for the EPC services is not to exceed $67,670,200, with potential adjustments for change orders.
- 4Construction activities are scheduled to commence later in 2007, with a target mechanical completion date of September 30, 2007.
- 5The EPC agreement includes robust provisions for change orders, performance warranties from Willbros, and defined termination rights for both parties, offering recourse in various scenarios.
- 6Force majeure clauses are in place, addressing potential delays due to uncontrollable events and outlining potential adjustments to the contract price for standby expenses, up to a limit of $1,500,000.