Golar says progress made on new FLNG deal

Floating LNG player Golar LNG is working to sign definitive agreements for an up to 20-year FLNG deployment.

In February, the LNG firm led by Tor Olav Trøim said in its 2023 results report that 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.

Golar said on Tuesday in its first quarter report that the framework agreement has now “progressed to detailed contract negotiations for an up to 20-year FLNG deployment”.

The next steps of the project development include signing of definitive detailed agreements, obtaining necessary third-party approvals including governmental and environmental, amongst others, and a mutual final investment decision (FID), the company said.

According to Golar, the FLNG development has a planned start-up during 2027.

The company’s CEO Karl Staubo said during the earnings call later on Tuesday that the development could include more than one FLNG over time.

Golar is working with the client whether Hilli or the MKII 3.5 mtpa FLNG should be the first one, Staubo said.

Cameroon FLNG offloads 112 cargoes, additional FLNG developments

Golar said its focus is on redeployment of its FLNG Hilli following the end of the FLNG’s current charter in July 2026, and thereafter ordering and securing commercial terms for a contemplated MKII FLNG.

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.

Golar said in the first quarter presentation that the FLNG has offloaded 112 cargoes up to date and produced more than 7 million tonnes of LNG.

Beside the mentioned project, Golar said it continues to advance additional FLNG developments and the company sees “increased prospective client interaction for our FLNG offering”.

“Geographically, most of the activity remains in West Africa and South America, however we are pleased to see other regions with proven stranded and associated gas reserves seek FLNG development,” the firm said.

Fuji LNG conversion

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.

Golar said the MKII FLNG project development continues, with previously ordered long lead items now 58 percent complete.

The company took delivery of Fuji LNG on March 4, 2024.

Golar said Fuji LNG will trade on a multi-month charter ahead of its expected transfer to the yard for FLNG conversion.

“Work between the topside manufacturer, shipyard and Golar continues to move the project towards a FID. Detailed negotiation for a debt financing facility to be available during the construction period of the contemplated MKII FLNG also continues with prospective lenders and made solid progress during the quarter,” the company said.

The quarterly presentation shows that total spend as of March 31, 2024, including Fuji LNG, is about $270 million. Golar committed more than $400 million for the development.

Golar said that an all-in FLNG price had been reconfirmed as an “industry-leading” with about $600 million/mtpa, and the yard slot was confirmed for H2 2027 sailaway if the conversion is ordered in 2024.

Tortue FLNG commissioning

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 in February.

Golar said in the quarterly report that the FLNG is “ready to commence operations”, while the project’s FPSO has now arrived at the project site.

“Hookup and commissioning of the FPSO are on the critical path to first gas and are expected to complete in the third quarter of 2024,” Golar said.

Commissioning of FLNG Gimi can start thereafter. FLNG Gimi’s commissioning period is expected to be about six months, concluding with the commercial operations date (COD), it said.

“Together with the client we are making positive progress in exploring options to bring forward parts of the commissioning process that could shorten this six-month commissioning period,” it said.

First standby day rate cash payment

During April, Golar received its first standby day rate cash payment from March 13, 2024 onwards, paid monthly in arrears, it said.

Also, pre-commercial operations date contractual cash flows are expected to be deferred on the balance sheet and released over the contract term from COD, it said.

The operators, BP and Kosmos, and Golar have reached an agreement in principle to resolve the disputed amounts for pre-COD cash flows from January 10, 2024, subject to final documentation and stakeholder approval, it said.

If made effective this agreement will provide Golar with progressive stage payments from January 10, 2024 until COD.

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 net income of $55 million, inclusive of $6 million of non-cash items, and Adjusted Ebitda of $64 million in the first quarter of this year.

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