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GasLog subsidiary signs time charter for provision of LNG FSU

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LNG Industry,

GasLog Ltd has announced that one of its subsidiaries has signed a 10-year time charter with Sinolam LNG Terminal, S.A. for the provision of an LNG floating storage unit (FSU) to a gas-fired power project being developed in Panama.

It is expected that the time charter will be fulfilled through the conversion of the GasLog Singapore – a 155 000 m3, tri-fuel diesel electric (TFDE) LNG carrier built in 2010. The required modifications are such that, as well as being FSU ready, the vessel will still be capable of trading as an LNG carrier following the conversion works.

According to the statement, the vessel’s conversion will take place in conjunction with its scheduled five-year special survey in 3Q20, allowing both time and cost synergies with the vessel’s regular dry-docking. The charter commences on delivery of the FSU in Panama, which is scheduled for November next year.

Since September 2016, GasLog claims the LNG carrier has been trading in the LNG carrier spot market. The FSU contract is for a fixed period, therefore delivering 100% utilisation for the duration of the charter. The FSU will also incur a lower OPEX than if the vessel was trading as an LNG carrier, with GasLog estimating that the charter will generate approximately US$20 million of EBITDA per annum over its 10-year lifespan.

GasLog claims the FSU will receive, store and send out LNG to a gas-fired power plant that is currently being developed near Colón, Panama, by Sinolam Smarter Energy LNG Power Co. (Sinolam) – a subsidiary of private Chinese investment group Shanghai Gorgeous Investment Development Co. The power project has reportedly signed long-term power purchase agreements with leading utility companies in Panama, as well as a 15-year LNG sale and purchase agreement with Royal Dutch Shell plc.

Paul Wogan, Chief Executive Officer, stated: “The 10-year FSU charter once again demonstrates GasLog’s ability to execute on our strategic objectives of locking in long-term stable revenues and full utilisation on one of our existing open vessels. Owning and operating an FSU will also expand GasLog’s service offering. We look forward to partnering with Sinolam to deliver gas-fired power to Panama, thereby displacing coal, oil and oil products in the country’s energy mix with cleaner natural gas.”

Kenneth Zhang, Chief Executive Officer of Sinolam Smarter Energy, added: “The LNG FSU is a key element of our integrated power project, and we are very pleased to welcome GasLog as a strategic partner for our commercial operations. GasLog’s entry into the project is a vote of confidence in our business platform and the attractiveness of Panama as an investment opportunity.”

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