Golar Eyes Third African FLNG Venture
Golar LNG is already co-developing West Africa’s first Floating LNG export project in Cameroon, led by UK-French producer Perenco, and expects the green light to be given soon for a second in Equatorial Guinea, dubbed ‘Fortuna LNG’, led by UK independent Ophir Energy.
However in its 2015 annual results on February 29, Golar said it hopes to develop two new such ‘GoFLNG’ ventures, with CEO Gary Smith saying it hopes to sign heads of terms around the middle of this year on a new project in west Africa, followed by one in the Middle East although he declined to confirm it would be Iran. In January, Golar LNG signed an MOU to co-operate on the global development of greenfield, brownfield and stranded gas reserves with US services giant Schlumberger.
Low oil prices meant that resource holders were knocking on Golar LNG’s doors for talks, Smith told analysts. He saw it as still possible to produce gas in some parts of West Africa at about $1/mn Btu so, once tax and royalties of 50c were added and a $2/mn Btu liquefaction tolling fee, he believed it is still possible profitably to ship LNG from new African FLNG ventures at $4 and, net of shipping, deliver it at $5/mn Btu.
The tolling fee for Perenco is indexed to Brent, said Smith, to protect that venture from low oil price economics, although he declined to divulge “live” negotiations with Ophir on the kind of tolling fee it might pay.
FID was taken last autumn on Cameroon FLNG, which will use Golar LNG’s GoHilli ship. The Perenco-led project is scheduled to enter in Q2 2017, said Smith: “One year from now, we will be well into commissioning activities in Singapore, prior to sailing to Cameroon.”
Regarding Ophir's planned 2.2mn metric ton/yr Fortuna floating LNG (FLNG) project in Equatorial Guinea, Golar LNG said this made good progress over the past quarter, with shortlisting of LNG buyers down to the last 3 contenders. Fortuna thus remained on track to achieve FID in mid-2016, said Golar. Schlumberger’s own farm-in to half of Ophir’s 80% interest in Fortuna, initialled in January “has the potential to bring forward to 2019 an FID on a second Fortuna FLNG vessel,” according to Golar LNG. Smith said the resource base in Equatorial Guinea is sufficient for two FLNG vessels.
Golar LNG is involved in projects to provide LNG import facilities for regions where gas-fired power is needed.
Golar Tundra is due for deployment at the port of Tema in Ghana as a floating regasification and storage unit (FSRU) in second quarter 2016, said Smith, adding that globally there was a “continuing high level of FSRU enquiry, driven by plentiful LNG supply and low LNG prices.”
Across the Atlantic, Golar Arctic has been chartered to New Fortress Energy for use as a FSU (floating storage unit) in Jamaica for two years commencing March 2016. In the third quarter, Golar also hopes to take FID on Brazil's Sergipe power project which would also use a Golar FSRU.
Golar LNG made a full year 2015 net loss of $178.5mn, compared with a 2014 loss of $41.5mn, as short term LNG tanker charter rates continued to deteriorate through the second half of last year. “We don’t see a material improvement in the current quarter,” said Smith. However with new liquefaction projects starting up – citing Sabine Pass’s debut export cargo en route to Brazil, and Gorgon LNG in Australia about to load its first cargo – Smith said this could lead to a shortage of LNG tankers as soon as 2017. Pre-tax operating losses (Ebitda) at Golar LNG doubled to $12mn in Q4 2015, relative to 3Q 2015 and the company reduced its dividend.
Mark Smedley