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Golar’s Floating Liquefied Natural Gas Business: What’s to Come?

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Golar’s floating liquefied natural gas business

Golar (GLNG) is actively pursuing FLNG (floating liquefied natural gas) projects. The company’s strategy focuses on the development of low-capital, rapid-deployment floating facilities, using the conversion of existing LNG (liquefied natural gas) carriers and floating technologies for the liquefaction of pipeline quality gas. Golar is the first in its peer group, which includes GasLog (GLOG), Höegh LNG Partners (HMLP), and Teekay LNG Partners (TGP), to develop floating storage and regasification unit projects based on the conversion of existing LNG carriers.

Golar's Floating Liquefied Natural Gas Business: What's to Come?

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FLNG projects

Golar’s first conversion project was the Hilli LNG carrier in 2014. According to this contract, Golar had options to convert two more vessels. The company exercised these options in 2015 and will convert the Gimi and Gandria LNG carriers to floating liquefaction facilities. GoFLNG (Golar FLNG) Hilli will be delivered in 1Q17, GoFLNG Gimi will be delivered in 2018, and GoFLNG Gandria will be delivered in 2019.

Updates on GoFLNG

Gazprom, Parenco, and SNH (Société Nationale des Hydrocarbures) have signed a firm eight-year sale and purchase contract for LNG from GoFLNG Hilli. The company also entered into a MoU (memorandum of understanding) with Schlumberger to cooperate globally on the development of green field, brown field, and standard gas reserves through the use of GoFLNG vessels.

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Benefits for Golar

According to the company, increasing the production from Hilli to three trains has the potential to increase Golar’s EBITDA (earnings before interest, tax, depreciation, and amortization) from the current $170 million to $300 million range to between $240 million and $430 million, without increasing capital costs to Golar.

FLNG prospects

Interest in developing FLNG projects remains strong and new opportunities are being added to the list of potential projects. Lower LNG (UNG) prices have reduced oil companies’ interest in FLNG. Also, the company believes cooperatiing with Schlumberger enhances the value proposition of GoFLNG. Golar aims to have five or more GoFLNG vessels operating or undergoing conversion by the end of the decade.

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