Global Energy Ventures Ltd, the leading developer of global integrated marine compressed natural gas (CNG) projects, is pleased to announce the execution of our a Letter of Intent (LOI) with Yantai CIMC Raffles Offshore, Ltd (‘CIMC Raffles’) to build the CNG Optimum 200 ships. The LOI is based ona firm order for four (4) 200MMscf Compressed Natural Gas (CNG) ships with the option for GEV to order up to an additional four ships. The parties have executed the LOI, with the intention of entering a Shipbuilding Engineering, Procurement & Construction (EPC) contract, employing GEV’s CNG Optimum design.
As reported on 3 April 2019, three shipyards completed comprehensive technical specifications employing the CNG Optimum design approved by the American Bureau of Shipping. This followed a targeted selection process led by GEV Director Jens Martin Jensen, and run over the past 12 months supported by the company’s ship broker Clarksons Platou (Clarkson’s) and SeaQuest Marine Project Management Ltd (SeaQuest) providing ship engineering experience to assist in finalising the technical specification.
The selection of CIMC Raffles has been driven by the commercial terms under the LOI, track record of delivering in excess of USD 6 Billion in EPC contracts since 2012, experience with CNG systems, and moving forward, their scale of operations with three yards will support our growth aspirations of multiple CNG projects requiring shipbuilding contracts.
Non-Executive Director Jens Martin Jensen said: “In my 30 years of new ship builds, CIMC Raffles have proven to be a highly credible and very capable yard for new builds, and they are without doubt an investment grade shipyard for GEV’s first marine CNG project. They are the logical choice for GEV given their scale of operations to support a multiple ship order, their history of building the only CNG ship to date, and a track record in successful EPC delivery.
“Together with our advisors Clarksons and SeaQuest, we continue to focus on our preferred shipyards to refine their technical specification and capital cost improvements, and work towards a final draft contract. Executing our first LOI with a respected shipyard to deliver our first CNG Optimum Contract is indeed a key milestone for GEV representing a major de-risking event.” Under the proposed Shipbuilding Contract the CNG Optimum ship will be:
• designed, procured, built, tested, and delivered by the shipyard.
• capable of operating for the intended and defined waters for the purpose of delivering CNG from gas supply to gas buyer in generally accepted ocean shipping conditions.
• substantially based on the completed technical specification with accompanying documents/drawings provided to GEV.
• delivered on a fixed contract price based on the final technical specification and subject to, amongst other things, all four firm ships being committed for construction under the same Shipbuilding Contract, and adjustment for any revision to the Technical Specifications agreed to by the Parties.
• delivered on a thirty (30) month construction schedule for the first ship, then every four (4) months for the following three firm ships. CIMC Raffles has provided a contract price range of USD 135-140 million subject to the final terms of the Shipbuilding Contract being finalised. The capital cost provided remains within the Company’s capital costrange to ensure our CNG projects in development are commercially viable and provide the required rate of return to fund the future debt and equity requirements. The final contract price will be mutually agreed by both Parties and recorded in the Shipbuilding Contract before its execution. Payment terms are aligned with standard milestones for new ship builds.
The major terms of a Shipbuilding Contract, including a final contract price, payment terms, scope of supply, and delivery date, are subject to further discussion and agreement by both parties and once mutually agreed shall be included in the final Shipbuilding Contract.
The term of the LOI is for ninety (90) days from the date of signing. GEV, its advisors, and CIMC Raffles will continue to work towards an executable shipbuilding contract during this time and continue to refine the technical specifications.
Executive Chairman and CEO Maurice Brand added: “The culmination of 12 months work by our shipping team will now accelerate GEV’s regional gas supply agreements that are being progressed across multiple regions. Our target projects are either seeking to commercialise stranded gas assets, commercialise associated gas production, or provide a transport solution to high growth markets with bankable long-term off-take customers in place. Our ship capital cost for the 200MMscf is transformational for CNG to become a viable alternative to FLNG or sub-sea pipelines.”