US engineering company KBR is not interested to conclude a fixed price contract to build Canada’s Goldboro LNG facility, according to the project developer Pieridae.
Pieridae said on Monday it received a notice from KBR saying the firm was “no longer prepared to negotiate and conclude the contract”.
The lump sum turnkey contract includes engineering, procurement, construction and commissioning of the proposed 9.6 mtpa facility.
The duo signed a deal for the project in March 2019 which included technical verification and an open book estimate.
The two companies planned to enter an EPC contract after the final investment decision on the Goldboro LNG project.
Pieridae says that KBR has indicated it remains interested in providing the EPCC services for construction of the facility.
“KBR’s decision to no longer provide a fixed price contract is in apparent contravention of its obligation under the terms of a signed services agreement on March 27,” it said.
Pieridae’s CEO Alfred Sorensen said the company was “looking at all options.”
This includes discussing the matter with legal counsel to determine the most appropriate next steps.
“There are other reputable and experienced firms who have the expertise to provide these services, with some already indicating a willingness to replace KBR,” he said.
Sorensen added that Pieridae has already had discussions with several of them to “gauge their interest.”
KBR said last month it would exit most of its LNG and energy projects to focus on government contracts.
The company said it would no longer engage in fixed-price lump sum construction services.
The Covid-19 pandemic has accelerated KBR’s decision to leave energy projects.
The effects of the pandemic have destroyed demand around the globe pushing down prices to their record lows.
Goldboro LNG “remains solid”
Following the new development, Pieridae said its Goldboro LNG project “remains solid with many key elements in place.”
The project has secured majority of key permits also signing a 20-year contract with German energy company Uniper.
The deal with Uniper is for all of the volumes from the first 4.8 mtpa Goldboro liquefaction train.
Pieridae has recently delayed the final investment decision on the project due to Covid-19, also renegotiating deadlines with Uniper.
Pieridae now plans to start commercial LNG deliveries to Uniper between August 31st, 2025 and February 28th, 2026.
The new deal also extended the deadline for a FID to June 30, 2021.
Pieridae said today it will continue to take further steps to advance the project.
The company is working on the design and planning for infrastructure projects such as the highway re-alignment around the LNG site.
This includes construction of a large-scale work camp, building key marine facilities for LNG offloading, and facility site terracing.