Golar inks framework FLNG deal

Floating LNG player Golar LNG said it had signed a framework agreement with a “potential customer” for a long-term opportunity that could utilize either the 2.4 mtpa FLNG Hilli or a 3.5 mtpa FLNG.

The LNG firm led by Tor Olav Trøim revealed this in its 2023 results report on Thursday, saying that it made “strong progress” on redeployment of FLNG Hilli and potential MKII FLNG employment.

“Commercial terms being discussed are for charter opportunities with 12-20 year contract durations, where we are aligning towards mutually acceptable terms with gas resource owners,” the firm said.

Commercial terms and next steps

Golar did not provide more information regarding the contract in the report.

The company’s CEO Karl Staubo said during the earnings call later on Thursday that the framework deal sets out an alignment of commercial terms and specific next steps that both parties must meet.

“We are highly confident about both parties’ ability to meet the timelines put forward in the framework agreement,” where there is more uncertainty how that aligns with the governmental bodies.

“Those have been initiated and we’ve had joint meetings with relevant authorities, and based on indications received so far they seem to be aligned with our proposed timeline,” he said.

“But that continues to be the unknown once we talk about exact timing of when this is due,” he said.

“What we have said.. is that we want to have visibility on Hilli within 2024, both because that provides visibility and it also helps us in planning the next phase provided that we need to move it from the current location if that will be the case,” he said.

Staubo said that the development related to the framework deal is not located in West Africa, but he did not provide additional information.

Golar is in parallel working on technical development of these FLNG opportunities to optimize mooring solutions and required upstream infrastructure.

It is also engaging with respective authorities to establish fiscal terms and environmental
approvals for potential FLNG deployment, it said in the report.

Cameroon FLNG offloads 108 cargoes

Last year, FLNG Hilli, located offshore Cameroon’s Kribi, offloaded its 100th cargo of liquefied natural gas since it started operations in 2018.

Hilli produced 1.46 million tonnes in 2023. In total, it offloaded 108 cargoes – totaling more than 7 million tones of LNG produced since 2018.

Golar said in the report hat the FLNG “continued her market leading operational track record and exceeded her contracted 2023 production volume.”

This resulted in a release of the remaining 2022 contract year underutilization balance of $29 million to the income statement and the recognition of $0.3 million of 2023 over production revenue, it said.

Golar to take delivery of Fuji LNG next week

As per the MKII 3.5 mtpa FLNG project, Golar exercised its option last year to acquire the 148,000-cbm Moss-type carrier, Fuji LNG, which it aims to convert to a floating LNG producer.

Staubo said during the call that the firm expects to take delivery of the LNG carrier next week.

“As previously guided, we have committed more than $400 million to our planned next FLNG vessel, a Mark II FLNG, with a 3.5 mtpa liquefaction capacity. Long lead items are now 55 percent completed and we have spent $187 million of the commitment to date,” he said.

During the quarter, Golar agreed terms for and progressed a potential MKII debt facility and reconfirmed yard availability and pricing.

“We have reconfirmed pricing and yard availability for a potential order of a Mark II FLNG and expect 2027 delivery provided that we take final investment decision within 2024,” Staubo said.

Golar expects to take a final investment decision on MKII “when commercial terms for FLNG Hilli redeployment and/or a MKII FLNG have been concluded”.

Gimi

In November last year, Golar’s converted floating LNG producer, Gimi, left Seatrium’s yard in Singapore.

Golar announced in January this year the arrival of the FLNG at the site of BP’s Greater Tortue Ahmeyim project offshore Mauritania and Senegal.

However, the FLNG then proceeded to moor offshore Tenerife and BP said the unit arrived at the GTA hub earlier this month.

Golar said in the report that the FLNG is awaiting connection to the feedgas pipeline and start of commissioning activities.

“The client advises that first gas is expected in Q3 2024, subject to final completion of upstream activities and installation of the FPSO,” it said.

Project partner Kosmos Energy recently revealed that BP now expects the delayed FLNG project to start producing liquefied natural gas in the fourth quarter of this year.

Golar said the commissioning period is expected to take about six months, with commercial operations anticipated thereafter.

“FLNG Gimi expects to receive a standby day rate and daily commissioning payments ahead of COD. Pre-COD contractual cash flows are expected to be deferred on the balance sheet,” Golar said.

The firm said that COD triggers the start of the 20-year lease and operate agreement that unlocks the equivalent of around $3 billion of adjusted Ebitda backlog to Golar.

Golar reported full year 2023 total operating revenues of $298 million, a net loss attributable to the company of $47 million inclusive of $331 million of non-cash items, and adjusted Ebitda of $356 million.

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