Oil and Gas News

Leigh Creek locks in production contract for SA project

Leigh Creek Energy has awarded the engineering, procurement, construction, commissioning and finance (EPCCF) contract to South Korean engineering and construction company DL E&C Co.

The contract is for the development of the full commercial stage of the Leigh Creek Energy project (LCEP), consisting of a 1mtpa zero carbon urea production facility in South Australia.

The contract will also see DL E&C manage the LCEP bankable feasibility study (BFS) and front-end engineering and design (FEED) stages, ahead of the final investment devision (FID).

This contract follows the two companies entering into a binding heads of agreement (HoA) in May to negotiate with DL E&C for the feasibility study, FEED and engineering, procurement, construction and commissioning (EPCC) for LCEP.

The HoA executed by DL E&C and LCK outlined the principals for the feasibility study, FEED, EPCC and financing arrangements for LCK’s urea manufacturing facility to be included in the final agreement.

Once FID is made, DL E&C will lead engineering and construction of the ammonia and urea production infrastructure.

The company further outlined that under the agreement, DL E&C with LCK’s assistance, will arrange the required finance for the turnkey price of the urea manufacturing facility.

Following the agreement being finalised, LCK will retain 100 per cent ownership of LCEP.

DL E&C is set to make a start on the BFS, with the front-end engineering design following before IFD in late 2022.

LCK managing director Phil Staveley said the company was not bringing DL E&C in as a contractor, but as a partner for the project.

“Having a partner such as DL E&C for the project provides us with the confidence in delivering the best outcome for the project, for the stakeholders and for our supportive shareholders,” he said.

“Awarding the stage two construction contract moves the LCEP another major step closer to developing out large resource base in South Australia to be a leading supplier of urea to international markets and the Australian agriculture sector, removing many of the supply risks that currently impact Australia’a farmers.”