Golar LNG to develop third floating liquefaction facility

Golar LNG Ltd has finalised agreements for conversion of the Gandria LNG carrier to a Golar floating liquefaction facility (GoFLNG).

This is the third agreement inked for a floating liquefaction facility, following previous deals for the GoFLNG Hilli and Gimi conversions. As with these other conversions, the primary contract for the GoFLNG Gandria was entered into with Singapore's Keppel Shipyard Ltd. The Gandria conversion contract exercises the second of two options that formed part of the initial 2014 Hilli conversion contract. 

Black & Veatch will provide its licensed PRICO^® technology, perform detailed engineering and process design, specify and procure topside equipment, and provide commissioning support for the GoFLNG topsides and liquefaction process.

Hoe Wai Cheong, Executive Vice President and Executive Director of EPC Projects for Black & Veatch, said: “New GoFLNG facilities are set to reduce the cost and time required to monetise and deliver offshore gas to market […] One year on and the Hilli is well on track. Together with the third contract, this speaks volumes about the successful dynamic, partnership and commercial understanding in place between Keppel, Golar and Black & Veatch.”

Gary Smith, CEO of Golar LNG, said: “We are happy to deepen our collaboration with Black & Veatch whose PRICO technology has proven its simple and cost effective credentials in 25 plants around the world.  With Black & Veatch, Golar [is] able to provide an innovative, fast-track and cost effective floating liquefaction solution to our clients who are looking to develop their natural gas assets.”

Possible customers

Golar LNG decided to proceed with the third conversion project following a thorough review of the growing portfolio of business development opportunities for GoFLNG. Golar LNG notes that this review revealed potential demand from several possible customers for delivery of floating liquefaction facilities as early as 2018.

The Gandria conversion will be dedicated to satisfy the commitments to Ophir in Equatorial Guinea, covered by the agreement announced in May this year, requiring delivery of GoFLNG facilities in 2019. In parallel with this decision to commit Gandria to the Ophir project, Keppel and Black & Veatch will update their FEED study, accommodating the deep water operation in Equatorial Guinea on the basis of Gandria.  As such, the Gimi will be released to cover the potential emerging demand for a GoFLNG project in 2018.

The GoFLNG Gandria conversion contract will become effective by 21 September, prior to which certain conditions precedent must be satisfied. To achieve effectiveness, Golar LNG will make an initial payment to Keppel and Black & Veatch and will have until December 2016 to issue a full notice to proceed with the conversion. The contract provides beneficial cancellation provisions, which if exercised before December 2016 will allow termination of the contracts after deduction of a set cancellation fee. Additional contract flexibility allows for Golar LNG to determine when Black & Veatch place orders for certain long-lead items. This will enable Golar LNG to substantially reduce the initial payment due prior to contract effectiveness relative to the US$50 million paid upon making the Gimi conversion contract effective.

Golar LNG does not expect to raise any additional equity in connection with the ordering of the GoFLNG Gandria, following the recently announced financing for the Hilli project and the flexible terms in the yard contracts for the Gimi and Gandria.

Golar LNG expects to deliver the GoFLNG Hilli in 1Q17, Gimi around mid-year 2018, and Gandria 1H19. This schedule assumes that the Perenco contract is fully executed before 30 September 2015 and that the Ophir contract is executed prior to 30 June 2016.

Golar LNG, Keppel and Black & Veatch have also agreed to work out acceptable structures for further GoFLNG facilities.

Michael Chia, Managing Director (Marine & Technology), Keppel O&M, said: “We are extremely pleased to be executing a third GoFLNG conversion contract and thank Golar LNG for entrusting us with this repeat contract and for their continued confidence in our capabilities. Together with Golar and our partner Black & Veatch, we are confident of delivering these projects within the budgeted time and cost.”

Edited from various sources by Callum O'Reilly

Read the article online at: https://www.lngindustry.com/floating-lng/22072015/golar-lng-to-develop-third-floating-liquefaction-facility-1049/