Tor Olav Troim-led Golar LNG is to nudge up the production at its floating LNG (FLNG) production unit in Cameroon from early next year with work scheduled to bring sustained increase options online from 2023.

Golar said on Tuesday that it had agreed with charterers Perenco Cameroon and state authority the Societe Nationale des Hydrocarbures (SNH) that from 2022 capacity utilisation of its 2.4-million-tonnes-per-annum FLNG unit Hilli Episeyo would increase by 200,000 tonnes to 1.4-mtpa.

Under the agreement, Golar said Perenco and SNH had options to increase capacity utilisation by up to 400,000 tonnes per annum of LNG each year from January 2023 through until the partners contract on the FLNG unit ends in 2026.

“This has the potential to increase total annual LNG production from Hilli to 1.6 million tons from January 2023 onwards,” Golar said.

Underutilised

Hilli Episeyo — the world’s first LNG carrier-to-FLNG unit conversion — started up off Cameroon in May 2018 but only the capacity equivalent to the first two trains of the four-train unit were utilised.

Speaking on a results call in May, Golar chief executive Karl Staubo said the company will not extend the charter contract on Hilli Episeyo beyond 2026, unless the unit can be utilised at full capacity.

Troim also said on an earlier call that Golar has told the charterers that the unit will leave in July of that year.

Under this latest agreement, Golar said the 2022 incremental capacity is linked to European gas prices at the Dutch Title Transfer Facility or TTF gas prices.

Golar said that with current average TTF gas prices at $8.70 per MMBtu for 2022 the increased utilisation represents an expected $26.1m in incremental adjusted Ebitda.

The company added that each $1 per MMBtu change in TTF will increase or decrease this figure by $3.7m.

Upstream upgrade

Golar said that in addition, Perenco and SNH intend to drill two to three incremental natural gas wells during 2021.

In 2022, the companies then plan to upgrade upstream facilities to support further sustained increases in production from 2023 onward.

The tolling fee for the incremental capacity from 2023 will also be linked to TTF, Golar said.

Based on current average future TTF gas prices for 2023 of $6.72/MMBtu the additional 400,000 tonnes of production would generate $30.4m of incremental annual adjusted Ebitda.

This could increase or decrease by $7.4m for each $1 per MMBtu change in TTF prices.

Golar, which said it has an 86.9% economic interest in the incremental adjusted Ebitda generated from the agreement, said the option must be declared during the third quarter of 2022.

Track record

The company said the incremental adjusted Ebitda backlog of the potential increase in capacity utilisation for Hilli Episeyo from 2022 until July 2026 is expected to be around $113m.

This latest agreement does not alter any of the terms associated with trains 1 and 2 of the FLNG unit.

Satubo said: “The innovative tolling fee arrangement delivers on our announced strategy to increase our upstream LNG and gas exposure.”

He said the deal is “further testimony to Hilli’s strong track record of 100% commercial uptime since delivery in 2018”, adding that it will benefit all stakeholders and bring the company closer to its target to reach full capacity utilisation of the unit.