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    Lossmaker Golar Enters Key FLNG Stage


Ship operator and projects developer Golar LNG remains loss-making as it enters the final months ahead of launch of its first FLNG project.

by: Mark Smedley

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Lossmaker Golar Enters Key FLNG Stage

Ship operator and projects developer Golar LNG remains loss-making as it enters the final months ahead of launch of its first floating liquefaction project, which will be offshore Cameroon, while grappling with a flawed Ghanaian LNG import project.

The company reported a 2Q 2017 net loss of $73.8mn August 30, compared with losses of $99.5mn in April-June 2016 and $65.8mn in 1Q2017. Earnings before interest, tax, depreciation and amortisation in 2Q and 1Q 2017 were minus $6.6mn in 2Q and minus $12.4mn in 1Q.

On the upside, LNG fuel has been ordered for mid-September delivery to the Hilli Episeyo FLNG vessel, ahead of its departure from Singapore in late September/early October on its 32-40 day voyage to Cameroon, the company said, with handover to Cameroon FLNG operator Perenco this November.

Final investment decision on what is expected to be West Africa’s 2nd FLNG project, OneLNG’s 2.2mn mt/yr Fortuna LNG venture offshore Equatorial Guinea, remains expected 2H 2017 -for the project’s likely start-up in 2020; an offtake agreement with Gunvor was recently signed. Financing had taken longer than expected, CFO Brian Tienzo told analysts: “But it will fall into place.”

OneLNG too is looking to finalise terms for a 2nd Equatoguinean FLNG project by end-2018. Golar added: “OneLNG is currently working on 3 to 4 specific projects, each involving one or more FLNG units” of which two seeking 2021 delivery.

Separately, Golar noted that its involvement in the planned development of the first US FLNG venture with Delfin may eventually involve four FLNG vessels producing a total of up to 13mn mt/yr.

Golar also said financial close on its Brazilian Sergipe LNG/power venture is on track for 4Q 2017 (Golar LNG equity 25%).

But the Golar Tundra floating storage and regasification unit (FSRU), which was to have been Ghana’s first LNG import terminal, has now been idling at anchor some 5 km offshore the port of Tema for 15 months now; closing of a costly put option to sell Tundra back to Golar LNG was exercised in June

On the mainstream shipping market, Golar said that spot LNG charter rates were slowly improving, as the number of production projects onstream increases. “We believe that the market will tighten further, going forward,” CEO Oscar Spieler told analysts.

Golar Partners, the entity that retains equity interests in most LNG vessels operated or developed by Golar LNG, meanwhile said its net profit in 2Q2017 was $53.8mn, up from $23.6mn in 1Q2017 and $28mn in 2Q2016, helped by its sale of the idling Golar Tundra back to Golar LNG.

Hilli Episeyo, the Cameroon FLNG producer vessel, in the final stages of construction at the Singapore shipyard (Photo credit: Golar LNG's 2Q2017 results presentation, Aug 30 2017)


Mark Smedley