Golar LNG has reached final investment decision (FID) for the 20-year re-deployment charter of the FLNG Hilli Episeyo (FLNG Hilli), first announced on July 5, 2024. The vessel will be chartered to Southern Energy S.A. (SESA), offshore Argentina, to monetize gas from the Vaca Muerta shale formation.
Vaca Muerta is the world’s second largest shale resource.
In addition, Golar and SESA have signed definitive agreements for a 20-year charter for the MKII FLNG, currently under conversion at CIMC Raffles shipyard in Yantai, China. The MKII FLNG charter remains subject to FID and the same regulatory approvals as granted to the FLNG Hilli project, expected within 2025.
The two FLNG agreements are expected to add US $13.7 billion in earnings backlog to Golar over 20 years, before adjustments (based on US-CPI) to the charter hire and before commodity linked tariff upside. For every US$ 1/MMbtu above the US$ 8/MMbtu, the total upside for Golar will be approximately US $100 million when both FLNGs are in operation. Subject to a 3-year notice and payment of a fee, SESA may reduce the term of the agreement to 12 years for the FLNG Hilli and to 15 years for the MKII FLNG.
The FLNGs will be located in close proximity of each other, offshore in the Gulf of San Matias Gulf in the province of Rio Negro, Argentina. The vessels will monetize gas from the Vaca Muerta shale formation.
“Golar is excited to partner with the leading gas producers in Argentina in establishing the country as an LNG exporter,” said Golar’s CEO, Karl Fredrik Staubo. “The vast resources of the Vaca Muerta formation will provide the LNG market with a reliable long-term source of attractive LNG supplies, and a significant contribution to Argentina. For Golar, the project adds robust earnings backlog, attractive commodity upside potential in the FLNG tariff and strong partner alignment through our shareholding in SESA.”
