Golar LNG reported a second-quarter loss that was slightly wider than analysts estimates as spot rates for LNG shipping saw little improvement over the quarter and voyage expenses increased with the recent positioning of the Golar Tundra,  a floating storage and regasification unit (FSRU).

But West Africa Gas Limitied (WAGL), the Tundra's charterer, has yet to make its charter payments, which have been accruing since mid-July. Golar says it may start legal action if the payments remain delayed.

More LNG spot voyages in second quarter, but rates remain weak

The Oscar Spieler-led company reported an operating loss of $37.1m for the quarter, compared to a consensus estimate of $36m. Total operating revenue of $18.3 was slightly below estimates of $21m during the quarter.

The LNG shipowner said that spot rates remained relatively unchanged during the quarter at the low $30,000 per day range. But it said there was a modest improvement in utilisation compared to the first quarter, which saw operating revenue of $16.6m.

It said 22 spot voyages were completed during the second quarter by the Cool Pool, which is Golar’s ship pooling operation with Dynagas and GasLog. That compares to eight in the first quarter.

Golar said that toward the end of the of second quarter “chartering activity and LNG charter rates ... climbed steeply.” It credited the ramp-up of the delayed Gorgon and Angola export projects and the expected start-up of the second train at the Sabine Pass LNG project as helping sentiment.

Voyage, charter-hire and commission expenses increased to $12.2m during the quarter compared to $11.1m in the first quarter due to the cost of positioning the Golar Tundra from Singapore to Ghana at the end of May, and two carriers formerly chartered by Nigerian LNG into the Cool Pool.

Legal action possible 'if we have to go there'

On its earnings conference call, Golar executives said that amounts due under WAGL's charter contract for Tundra (built 2015) started to accrue from mid-July. But no payments have been received as yet.

Golar dropped down the Tundra to its limited partnership vehicle back in May. But Golar continues to consolidate the vessel  in its results until it has been fully accepted by its charterer. The partnership vehicle, Golar LNG Partners, is entitled to payment of hire and said invoices have been issued for this.

Speculation on the Tundra’s employment has been rumbling round LNG circles for the past few weeks.

CEO Spieler said Golar is having discussions with WAGL to resolve the situation. But said Golar also needs to protect the its rights under the contract.

He clarified that under the charter contract Golar is not in a position to tender the Tundra out for other business without permission from WAGL.

Chief financial officer Brian Tienzo said the company has “procured very strong legal opinion” on the FSRU contract, adding “if we have to go there”.

Golar said WAGL has experienced “significant delays with respect to the part of the project for which the developer are responsible”. But Tienzo said the company is “cautiously confident” that this project exists.