Golar Sets up JV with NY Fund. With Africa in Mind?
Golar LNG said June 20 it has entered into a 50/50 joint venture with New York-based private equity firm Stonepeak Infrastructure Partners.
The joint venture company, Golar Power, will offer integrated LNG based downstream solutions, through the ownership and operation of floating storage and regasification units (FSRUs) and associated terminal and power generation infrastructure. Stonepeak says it takes a "conservative yet opportunistic approach to infrastructure investing."
The New York fund is committing $290mn in new equity to develop Golar Power. Both companies say they are ambitious to “grow aggressively in the FSRU and LNG-fueled-power market.”
Although neither company explicitly cited Africa in their statement, it is clear that South Africa, Morocco and Cote d’Ivoire are currently tendering for FSRU/power solutions. Indeed Ghana has one or more under development. Opportunities also exist in Asia, Latin America and southeast Europe.
The FSRU/power sector is increasingly eyed by majors such as Shell and Total, mid-sized investors like Cheniere Marketing, private equity funds, and niche players like Israeli-controlled Quantum Power.
Stonepeak Senior Managing Director, Luke Taylor said: “While our initial commitment is $290mn we hope to invest up to $500mn in the coming years."
Golar Power's initial asset base will comprise the FSRU being built by Samsung in South Korea, two modern 160,000 m3 tri-fuel LNG carriers suited for conversion to FSRUs, and the right to invest in up to 25% of the Sergipe Power project in Brazil – expected to take FID in the second half of 2016. Golar LNG will also grant Golar Power a one-year option to acquire two more LNG carriers for conversion to FSRUs.
Once Golar Power is formed and assets above added, Stonepeak will acquire a 50% share for $117mn cash, subscribe to $100mn in preference shares on closing of the deal, and commit to $75mn in additional equity.
This, together with an extra $75mn funding commitment from Golar prior to Q1 2018, is expected to be sufficient including debt-financing to fully finance the conversion of the two carriers to FSRUs, take delivery of the 2017 new-build FSRU and complete the financing of its share of Sergipe Power project in Brazil.
Some $214mn in ship mortgage debt and $217mn of remaining newbuilding capex on the FSRU is projected to be transferred to Golar Power – which Golar LNG said would improve its own liquidity.
Golar LNG’s ship, Golar Tundra, is due to be the first FSRU deployed in sub-Saharan Africa. However, it has lain at anchor for more than 3 weeks some 5 miles offshore the Ghanaian port of Tema. Trade sources believe the port is not yet ready for the FSRU’s berthing and link-up to onshore infrastructure. Since May 31, Golar LNG has made no comment about the FSRU, which is chartered to the NNPC/Sahara Energy-owned West African Gas Limited.
In other LNG-related news on June 20, Monaco-based shipowner GasLog refinanced $960mn of bank debt on eight LNG carriers built in 2010-15 on a maturity five years longer (out to 2021) and also taken out a further $100mn of new debt. GasLog said the refinancing "demonstrated the banks’ strong appetite to lend to leading companies in the LNG industry." The $1.05bn refinancing "strengthens the balance sheet and creates additional liquidity for the company as we look to pursue a number of interesting growth opportunities in the LNG carrier and FSRU sectors,” said GasLog.
Mark Smedley | www.naturalgasafrica.com