© 2013 The Texas Lawbook.
By Natalie Posgate
Staff Writer for The Texas Lawbook
Houston-based Freeport LNG announced Monday that its subsidiary, Freeport Expansion, LP, has entered a binding 20-year liquefaction tolling agreement (LTA) with South Korea’s SK E&S LNG, LLC on its Quintana Island facility near Freeport, Texas.
The agreement makes SK E&S the first private Korean company to source U.S. shale gas and establishes a foothold for SK E&S’s expansion into the U.S. market. It gives SK E&S the opportunity to be a key player in the market alongside the state-owned Korean Gas Corporation, currently Korea’s largest LNG importer.
When the LTA begins, it will give SK E&S a base quantity of 2.2 million tons per annum (mtpa) of natural gas to bring back to its home country. SK E&S will be able to begin exporting LNG once Freeport completes constructing its third production train, which will serve as a natural gas liquefaction and LNG holding facility.
Freeport announced the same day that it has agreed to provide the same services to Japan’s Toshiba Corporation under the same terms.
SK E&S’s legal counsel is a team of Houston-based Akin Gump Strauss Hauer & Feld attorneys, led by energy partner Stephen Davis. The rest of the team includes energy partner Gabriel Procaccini, tax partner W. Thomas Weir, energy associates Kate Huggins and Heather Ashour, and Washington, D.C-based energy regulatory partner Julia Sullivan.
Davis said this is the first time for the firm to work with SK E&S. However, this is not his first rodeo in regard to helping Asian energy companies establish a presence in domestic LNG projects. Earlier this year, Davis led an Akin Gump team advising GAIL Global (USA) LNG LLC, a U.S. affiliate of GAIL (India) Limited, in a terminal service project in Lusby, Md.
According to Davis, SK E&S’s in-house legal department also played a significant role in the agreement.
King & Spalding’s Houston office is advising Freeport for the LTAs between both SK E&S and Toshiba, with energy partner Philip Weems as the lead attorney. Other attorneys assisting include energy associate Monica Hwang, construction partner Scott Greer, construction associate David Strickland, real estate partner Peter Oxman and corporate partner Jeffrey Stein, who is based in the firm’s Atlanta office.
King & Spalding has handled previous LTAs for Freeport, including one earlier this year with BP Energy and another in July 2012 with Osaka Gas Co., Ltd. and Chubu Electric Power Co.
The dollar value of the agreement remains undisclosed, however Davis said these sorts of transactions “are very large and will have positive impacts on both the U.S. and Korean economies.”
Davis also noted that this LTA is a continuation of an established trend of foreign companies venturing abroad to “take advantage of the natural gas that we find ourselves blessed with here in the U.S.” Because of this, Davis anticipates his and other Texas energy lawyers’ practices to become as busy as ever.
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