Golar LNG said the FLNG Hilli located offshore Cameroon’s Kribi would continue to produce 1.4 million tons per year from 2023 under a new deal revealed on Wednesday.
The floating LNG producer has in total four trains installed onboard with a production capacity of 2.4 million tons per year.
Cameroon’s Perenco and Société Nationale des Hydrocarbures (SNH) agreed with Tor Olav Troim-led Golar last year to boost utilization of the FLNG by 200,000 tons in 2022.
In addition, the partners plan to increase total annual LNG production from Hilli to 1.6 mtpa from January 2023 onwards.
Russia’s Gazprom is the sole offtaker from the FLNG project.
Golar said on Wednesday that Perenco and SNH, together with the customer of Hilli, have elected to exercise 0.2 mtpa of their optional Dutch TTF-linked production volumes from 2023 to July 2026, continuing the FLNG’s 2022 production volume.
“Significant free cash flow”
Based on current average 2023 TTF gas prices ($45.49/MMBtu) the 0.2 mtpa of production can generate $135 million of incremental annual adjusted Ebitda to Golar, according to the firm.
For each $1/MMBtu change in TTF, this adjusted Ebitda will increase (or decrease) by $3.2 million.
Also, the total value of the 0.2 mtpa production from 2023 until July 2026 is about $267 million in adjusted Ebitda to Golar based on current TTF forward prices, it said.
Hence Hilli will continue with three components to its adjusted Ebitda generation; a fixed tariff, a Brent oil linked tariff, and a TTF gas price linked tariff.
At current forward prices for 2023, Golar’s share of annual distributable Hilli adjusted Ebitda is expected to be approximately $286 million, it said.
Moreover, Golar said its share of total annual debt service for Hilli’s contractual debt is approximately $50 million.
Hilli is therefore expected to generate “significant free cash flow” to equity for the reminder of the fixed contract.
“Golar may enter into hedging transactions to reduce the sensitivity of the commodity linked components of Hilli’s future earnings, as we have done in 2022,” it said.