Golar LNG negotiating FLNG Gimi cost, timing revisions

Golar LNG Ltd. is in what it described as “advanced and positive discussions” with main building contractor, Keppel Shipyard Ltd., and engineering topsides subcontractor Black & Veatch, on a revised cost and time schedule for 2.5-million tonne/year (tpy) floating LNG (FLNG) Gimi’s conversion as a contingency response to the 12-month delay claimed by BP PLC on its Tortue project offshore Mauritania and Senegal (OGJ Online, Apr. 8, 2020). Golar does not anticipate further FLNG projects to be ready for final investment decision (FID) in the near future.

The company’s 2.4-million tpy FLNG Hilli Episeyo has maintained 100% commercial uptime for close to 2 years offshore Cameroon and is exporting its 39th cargo. The COVID-19 pandemic has however further depressed already low LNG prices and Golar does not expect to expand throughput during 2020. The vessel is currently operating Trains 1 and 2, with 3 and 4 idle. Into 2021 and beyond, however, the company expects significant reductions in associated gas output as a result of lower US oil production, together with the higher cost of non-associated US gas production, to increase Henry Hub pricing, discourage further investment in US LNG export projects, and create new opportunities for competitive gas elsewhere. 

Golar’s Barcarena terminal in Para state, Brazil, is expected to reach FID late 2020 or early 2021, permitting having been delayed by COVID-19, with FID for the associated 605-Mw power station currently anticipated mid-2021. Over the next 4 months the company will continue negotiations with industrial customers for gas from the 200,000-cu m Barcarena floating storage and regasification unit (FSRU), expected to begin operations first-half 2022. Power purchase agreements for the plant begin in 2025. The power plant will consume about 3 million cu m/day of gas.

Golar Power has signed a letter of intent with the government of the State of Pernambuco, northeastern Brazil, to develop an LNG import terminal in the Port of Suape. A floating storage unit (FSU) initially will be used to supply LNG to the region but may be upgraded to an FSRU later should there be interest from off-takers seeking regasified LNG, Golar said. The FSU will connect to an onshore truck loading terminal for distribution to industrial, commercial, and residential customers not served by pipeline networks. FID remains subject to regulatory approvals and finalization of commercial agreements, expected by end 2020. Golar expects modifications required to the chosen vessel are to be minimal, with operations starting mid-2021.

The company has secured key regulatory and environmental licenses to develop Santa Catarina FSRU terminal on the southern coast of Brazil. Golar Power owns 100% of Terminal Gas Sul Ltda., the project company responsible for development of the terminal. 

Golar Power said it is in the evaluation or development stage of more than 15 other terminals worldwide.

The company lost $104.2 million in first-quarter 2020, compared to a first-quarter 2019 loss of $41.7 million. The largest contributor to this loss was a $54.7 million loss on derivative instruments.