Investors in a planned LNG import project in Chile, which is centred on a floating storage and regasification unit, have filed a case in the US courts against former project partners.
Investors, including former hedge fund manager Andrew Kunian and LNG consultant Keith Bainbridge, are pursuing an action against the developers of the GNL Talcahuano near Concepcion in southern Chile.
Frozen out claims
Under litigation filed in the Delaware Court of Chancery, Kunian and his associates are alleging that in 2016 they were essentially frozen out of the project after former business partners Francis Smollen and Colin Williams fraudulently transferred the equity interests of two companies under the original project name of GNL del BioBio over to a new project structure.
Under the original project structure, Eos Infraestructure was the company controlling the equity in the import terminal and Eos LNG was the outfit selling the LNG to the new import venture.
But under the new project name of GNL Talcahuano, these became EOS Investment Group and Eos LNG Group, respectively.
Kunian started his project to export US LNG to Chile in 2012.
Three years later, Eos LNG acquired the rights to use and supply the terminal with LNG for 20 years and a terminal development agreement was signed between Eos Infraestructure and Compania Regional de Infraestructuras.
Chinese shipbuilder Wison Group had come up with a design of an FSRU for the project, which aimed to supply around two million to three million tonnes per annum of LNG — a total of 68 mtpa in total over the 20-year period — into energy-hungry southern Chile.
The project, including the FSRU, associated jetty and pipeline, was estimated to cost around $500m.
Switch to Delaware
Kunian and his associates originally filed their action against Smollen and Williams and the two new companies they formed in Massachusetts in October 2018. But the court there ruled that it had no jurisdiction over the individuals cited so the action was switched to Delaware, where Kunian’s lawyers feel this is more certain.
Under the action, they are looking for a court order that the assets be transferred back into the original companies. If the court rules this is not possible, then they will seek compensation for the profits that would flow from the LNG sale-and-purchase agreement and the terminal.
Smollen did not reply to a request for comment on the action and project.
Kunian’s lawyer said that in counter action, Smollen and Williams have filed a case in a court in Texas against Kunian, arguing that he misled them into joining the project.
“We are confident that this project is going to get done with the original equity holders as the principals again,” Kunian said.
