Golar’s FSRU conversion deal with Italy’s Snam falls through

Golar LNG’s deal with Italian energy firm Snam to convert the 2003-built steam LNG carrier, Golar Arctic, into an FSRU fell through as the latter has not issued a notice to proceed.

In May last year, Golar signed the deal with Snam to supply a converted FSRU for Snam’s project in the port area of Portovesme, Sardinia.

The contract had a price tag of 269 million euros ($296.6 million) and included the vessel and the capex for Golar to convert its LNG carrier Golar Arctic into an FSRU with storage capacity for up to 140,000 cbm.

However, start of activities for the FSRU conversion of the ship remained subject to Snam’s issuance of a notice to proceed, according to Golar.

Golar’s CEO Karl Fredrik Staubo said during the company’s second-quarter earnings call on Thursday that Snam of Italy had an option to convert Golar Arctic into an FSRU.

“This option lapsed in July and we are now reviewing alternatives for her, including long-term charter or asset sale,” he said.

Golar also said in its quarterly report that “capitalized engineering and professional services for the conversion have therefore been charged to project development expenses, with a corresponding recognition of compensation received from Snam under other operating income.”

FLNG focus, Piombino FSRU

Golar Arctic and Fuji LNG are the only carriers in Golar’s fleet as it previously sold eight vessels to CoolCo.

Earlier this year, Golar exercised its option its option to acquire the 148,000-cbm Moss-type carrier, Fuji LNG, which it aims to convert to a floating LNG producer.

The company is now completely focused on FLNG projects and expects the converted 2.5 mtpa Gimi FLNG to leave the yard in Singapore next month.

This is Golar’s second FLNG besides the 2.4 mtpa Hilli FLNG located in Cameroon.

On the other hand, Snam recently commissioned the FSRU-based LNG import terminal in the Italian port of Piombino, which features the 170,000-cbm Golar Tundra.

Snam purchased Golar Tundra with a regasification capacity of 5 bcm from Golar last year for $350 million.

Golar also assisted Snam with Tundra’s drydocking, site commissioning, and hook-up, and entered into a six-month operation and services agreement for the FSRU starting May 31, 2023, according to its quarterly report.

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