Golar seals FLNG conversion deal

Nasdaq-listed floating liquefied natural gas (FLNG) specialist Golar LNG has signed a contract with CIMC Raffles shipyard in China on a vessel conversion project expected for delivery in the fourth quarter of 2027.

The engineering, procurement and construction deal worth $1.6bn covers the revamping of Golar-owned LNG carrier Fuji LNG with a storage capacity of 148,500 cu m. 

The Tor Olav Trøim-backed company said its MK II FLNG vessel would have a liquefaction capacity of 3.5m tonnes of LNG per year and that its design is an evolution of its FLNG Hilli and FLNG Gimi assets.

“The MK II design allows for a modularisation of the construction process as well as further efficiency and operability advances based on learnings from previous experience on constructing and operating our existing FLNG assets.”

The total budget for the conversion is $2.2bn, including the conversion vessel, yard supervision, spares, crew, training, contingencies, initial bunker supply and voyage-related costs to deliver the FLNG to its operational site, excluding financing costs. 

Yard selection was concluded two years ago, and as part of the final agreement, Golar has also secured an option for a second MK II FLNG conversion slot at CIMC for delivery within 2028.

Golar noted that the 2027 delivery makes the unit the earliest available floating liquefaction capacity globally.

“Based on potential charter terms in line with the most recent long term FLNG charter agreements, the MK II FLNG has earnings potential of approximately $0.5bn of adjusted annual EBITDA, before commodity exposure,” the company said.

Karl Fredrik Staubo, Golar LNG chief executive, commented: “The ordering of the MK II FLNG strengthens Golar’s position as the market leading owner of FLNGs, increasing our controlled liquefaction capacity by about 70% to 8.6 MTPA. With a delivered price of around USD 600/ton of liquefaction capacity and an attractive Q4 2027 delivery, we believe today’s FLNG order is well positioned to offer prospective clients an attractive time-to-market to enable gas monetisation whilst driving value for Golar.”