Golar LNG in negotiations for another FLNG vessel

Golar LNG now confirms that the company is in negotiations to exercise an option for the order of a third FLNG vessel that can store gas. This comes on the heels of a lucrative contract for the company's second FLNG vessel.
Photo: Höegh LNG
Photo: Höegh LNG

American Golar LNG announced yesterday, Tuesday, that the company had secured work for its second FLNG vessel in a new contract which runs over 20 years and is expected to generate an annual EBITDA of about USD 350 million in the long term.

And Golar LNG now confirms that the company is in negotiations with the two shipyards Keppel and Black & Veatch to exercise an option for a third FLNG vessel, writes Golar LNG in a statement.

FLNG vessels are used as storage facilities for liquid natural gas, and the third vessel is a part of the framework agreement between Golar LNG and the two yards. If the negotiations result in an order, the production will start up in 2018, according to the plan.

The third FLNG vessel will thus be deployed as the second vessel following Hilli which will be used off of Cameroon in 2017, and Gimi which on Tuesday secured work for 20 years off of Equatorial Guinea in Africa.

"Progress with our projects in Cameroon and Equatorial Guinea provides evidence of the technical and commercial competitiveness of GoFLNG, and customer recognition of the benefits of the shorter lead-time and lower risk implementation inherent to our approach. We intend to maintain first-mover momentum by positioning the company to capture new business opportunities, while safeguarding Golar's capacity to fund and execute existing and any new projects," says Frank Chapman, the Chairman of Golar LNG, in the statement.

Possible breakthrough in 2015

Yesterday, Tuesday, Golar LNG secured employment for the vessel Gimi on a 20 year contract with energy company Ophir Energy, and the analyst agency Clarksons Platou wrote afterward in a comment that "2015 is the year when GoFLNG will go from hope to reality." The positive outlook is echoed by Norwegian Fearnley, which also sees the new contract as a sign of sustainability in the company's product.

"The agreement emphasizes Golar's FLNG solution as financially sustainable. In the current energy market with low prices and a significant decline in LNG prices in the Far East in the last nine months, GoFLNG still makes economic sense," assessed Fearnley.

In addition to the storage units (the FLNG vessels), Golar LNG also operates LNG carriers and floating regasification vessels (FSRU). In the fourth quarter 2014 the company suffered a net deficit of USD 38 million compared to a profit of USD 7.8 million in the previous quarter. The price on LNG transports has plummeted and reached a four-year low at the end of last year.

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