Golar LNG has completed the design of a 5 million tonnes per annum floating LNG unit and has an offer from a South Korean yard to build it.
Speaking on a fourth-quarter results call, chairman Tor Olav Troim said the company has spent 10 years working on the design with the shipyard.
The design is now ready and the company has received a proposal for a turnkey contract from the yard.
Troim said the unit would cost around $500m per production tonne or $2.5bn ready installed and would need a gas reserve base of 5trn cubic feet to employ it for 20 years.
Chief executive Iain Ross said the 5-mtpa unit could have an operating margin of $750m per year based on a $3-per-MMBtu price spread between the delivered cost and market price of LNG.
Troim talked up Golar’s experience in FLNG.
“Shell has spent $15bn to build Prelude [FLNG] and it has so far ... delivered just a handful of cargoes,” he said. “It’s been a catastrophe.”
In contrast, he described Golar as having “cracked the nut” with its $1.3bn Hilli Episeyo FLNG unit in Cameroon, which has produced 52 cargoes on 50% of its capacity.
“It’s a very different story,” he added.
The company is looking at a possible redeployment of Hilli. Troim said Golar has informed the charterer, Perenco, that it will be leaving in July 2026.
He said the floater is already a spot FLNG unit, as Perenco has no option to extend its hire.
If you can't beat them...
Troim said Golar shares a clear vision with the management of New Fortress Energy (NFE) — which is buying Golar’s joint venture Hygo Energy Transition and Golar LNG Partners — of delivering cheaper and cleaner energy to emerging markets. But he said this needs molecules.
Golar and NFE co-founder and chief executive Wes Edens are “extremely excited” and “want to move fast” on FLNG.
Troim said the merger with Hygo Energy Transition into NFE is not a sale.
“What we are doing as a large shareholder in NFE is to create a real powerhouse for downstream LNG activities," he added.
While the energy majors talk about what they are going to do, NFE is not only talking, “they’re doing it. So if you can’t beat them, join them.”
Simplified structure
Ross said Golar will continue to explore simplifying its business structure further by splitting its FLNG and shipping assets.
He highlighted that Golar will have an 8.9% shareholding in NFE. He said as NFE's business grows and it requires tonnage, there will be an opportunity for Golar to provide some of those vessels.
Chief financial officer Karl Staubo revealed that when Hygo Energy Transition filed and later retracted its planned initial public offering, the company had “several suitors”.
He said that over time Golar believes shipping and FLNG probably do not belong in the same entity.
