Golar LNG's second floating LNG (FLNG) production unit will be employed by BP for the next two decades, working on the Greater Tortue Ahmeyim project in the Atlantic Ocean.
The New York-listed company announced Tuesday that the oil company signed a 20-year deal for the $1.3bn, 126,277-cbm FLNG Gimi (built 1976), to be owned by newly incorporated subsidiary Gimi MS Corp.
The transaction is expected to earn Golar LNG $215m per year, before taxes, interest, depreciation and amortisation.
"This landmark 20-year agreement with BP, which is Golar's second FLNG tolling agreement, is the culmination of a lot of hard work and commitment from the project and commercial teams that commenced late 2017," said Golar LNG chief executive Iain Ross.
The Gimi, currently at Keppel Shipyard in Singapore with conversion set to begin soon, will be stationed at a nearshore hub on the Mauritania-Senegal maritime border starting in 2022, liquefying 2.5 million tonnes per annum in a field estimated to contain 15 trillion cubic feet of gas resources.
As part of the deal, Keppel Capital subsidiary First FLNG Holdings will take a 30% stake in Gimi MS. Gimi MS will build, own and operate the Gimi.
Golar is also closing in on a $700m financing facility from a "syndicate of international banks" to be available during construction.
Deutsche Bank analyst Chris Snyder said length of the deal is longer than expected, indicating BP would look to quickly expand the Greater Tortue Ahmeyim project given the amount of gas available.
"Golar’s success with the Hilli Episeyo has helped to derisk the FLNG investment case, which has allowed the company to execute longer-term contracts," he wrote in a note to clients.
"While the per unit (mtpa) economics come in below the Hilli, we think this is offset by the longer-term contract and potential upside via expansion opportunities."
Like Snyder, Ross also credited the Hilli Episeyo — the world's second FLNG unit that started producing cargoes for Gazprom Marketing & Trading's offtake last year — with providing "proof of concept" that the carriers work.
That ship was also converted by Keppel, in a project that cost at least $775m. It made its first export that May.
The Gimi's conversion was first floated last spring. In December, Golar received a limited notice to proceed on the project from BP.
