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Norton Rose Fulbright advises on the financing and delivery of the Hilli Episeyo

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LNG Industry,

Norton Rose Fulbright has advised Fortune Lianjiang Shipping S.A., an indirect subsidiary of shipping conglomerate CSSC (Hong Kong) Shipping Company Limited, on the US$1.2 billion financing and delivery of the world’s first converted FLNG production vessel Hilli Episeyo, under a sale and leaseback agreement between Fortune Liangjiang Shipping S.A. as lessor and Golar Hilli Corporation as bareboat charterer, supported by Golar LNG Limited.

Pre-delivery financing agreements were put in place in 2015, whereby Fortune Lianjiang Shipping S.A. part-financed the FLNG conversion works, backed by a US$840 million senior loan provided by China Development Bank Corporation.

The Marshall Islands-flagged FLNG production vessel was accepted under its Liquefaction Tolling Agreement with Anglo-French oil and gas company Perenco and Cameroon’s state-owned Societe Nationale des Hydrocarbures on 4 June 2018, and subsequently delivered to Fortune Lianjiang Shipping S.A. on 20 June 2018, at which point Fortune Lianjiang Shipping S.A. took full ownership of the vessel and a bareboat charter with Golar Hilli Corporation became effective. The vessel is already fully operating off the coast of Cameroon and the first of its cargoes has arrived in China.

The Norton Rose Fulbright team advising on the lease finance aspects of the deal was led by Singapore-based partner Ben Rose, supported by of counsel Sue Ann Gan and associates Jaye Bhogal and Sophie Polisena. Hong Kong-based partner Jonathan Silver and senior associate Georgina Axon advised Fortune Liangjiang Shipping S.A. and CSSC (Hong Kong) Shipping Company Limited in relation to the senior loan with China Development Bank Corporation. Of counsel Sung-Hwan Choi provided Marshall Islands law advice.

Ben Rose commented: “This is a landmark deal. Hilli Episeyo is the world's first converted [FLNG] vessel, having been converted from a Moss-type LNG carrier at Keppel Shipyard in Singapore. It is able to liquefy 2.4 million [tpy] of LNG. When compared with other FLNG projects using bespoke newbuild options, Golar’s solution to convert an existing ship offers a quick and relatively cheap solution to the problem of monetising ‘stranded gas’, which in this case refers to gas in offshore fields that would not be viable or economic to extract using existing methods. Such stranded gas represents 40% of all offshore natural gas reserves. Golar’s converted FLNG business model dramatically reduces the cost per [million Btu] of liquefying gas, whilst allowing Golar’s customers to meet urgent requirements for new gas-to-power projects globally.”

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