Joint venture Golar Power has been given the go-ahead to begin commercial operations at its new 1.5GW Porto de Sergipe I power plant project in Brazil.
The Golar LNG arm, which is a joint venture with Stonepeak Infrastructure Partners, received its commercial operations certificate from Brazilian Electricity Regulatory Agency ANEEL on 21 March.
Golar LNG, which last week detailed its second LNG import project for Brazil, said the beginning of operations at the plant also triggered the start of bareboat charter payments for the 100% Golar Power-owned 170,000-cbm floating storage and regasification unit Golar Nanook (built 2017), which will supply the plant.
The company said annual revenues from the unit, less adjusted, forecasted operating costs, of $43.9m are expected from the charter.
Revenues less forecasted operating costs over the life of the Nanook contract without further inflation adjustment are estimated at $1.1bn, it added, of which Golar LNG’s 50% share is expected to be $549m.
Upside
Golar LNG, which owns 25% of the power station through its 50% investment in Golar Power, flagged up the potential for "further upside".
It said this can be expected from the downstream LNG distribution business that will be developed using the "significant spare capacity" on the FSRU which is capable of supplying more than 21m cbm of natural gas per day.
Golar LNG said Porto de Sergipe 1 is "the first integrated LNG-to-power project in Brazil and the largest and most efficient thermal power station in Latin America".
The project secured a 25-year power purchase agreement from the Brazilian government in 2015.
The new plant will now start to deliver electricity to a pool of 26 power distribution companies across the country until December 2044, Golar LNG said.
The company said its share of annual revenues less forecasted operating costs over the life of the project are expected to amount to BRL 6.9bn, which it said is equivalent to $1.7bn based on an average 2019 BRL to USD exchange rate.
“The project revolutionises the way power is delivered to millions of people in Brazil, allowing the country to meet its growing requirement for base-load capacity using a large-scale power plant fuelled by cleaner and more reliable LNG," Golar LNG said.
The company added that it will facilitate Brazil’s transition to lower-carbon energy generation sources while also promoting the use of LNG to balance and diversify its supply of energy.
