Golar entered into 20-year agreements for 5.95mtpa nameplate capacity in Argentina – one of the world’s largest FLNG development projects.

Rhea-AI Summary

Golar LNG (GLNG) has secured two major 20-year FLNG charter agreements in Argentina, marking one of the world's largest FLNG development projects. The first agreement involves the FLNG Hilli (2.45 MTPA capacity) with a $285 million annual charter hire, starting 2027. The second involves the MKII FLNG (3.5 MTPA capacity) with a $400 million annual charter hire, starting 2028. Both charters include a 25% commodity linked tariff for prices above $8/mmbtu. The projects will add $13.7 billion in earnings backlog over 20 years. The vessels will be chartered to Southern Energy S.A. (SESA), a consortium including major gas producers and Golar (10% stake). The FLNGs will be located in the Gulf of San Matias, monetizing gas from the Vaca Muerta formation, the world's second-largest shale gas resource.

Positive

• Secured two major 20-year FLNG charter agreements worth $13.7 billion in earnings backlog
• Significant annual charter hire revenue: $285M for FLNG Hilli and $400M for MKII FLNG
• Additional upside potential through 25% commodity linked tariff above $8/mmbtu
• 10% ownership stake in SESA provides additional commodity exposure
• Project received full government support and 30-year unrestricted LNG export authorization

Negative

• Potential early termination rights for SESA (12 years for Hilli, 15 years for MKII)
• Possible charter hire reduction for FOB prices below $7.5/mmbtu
• Maximum accumulated discount cap of $210 million over contract life

Insights

Energy Infrastructure Analyst

Golar secures transformative 20-year FLNG contracts worth $13.7B in Argentina with substantial commodity upside potential.

This announcement represents a major strategic milestone for Golar LNG through two 20-year Floating LNG contracts totaling 5.95 MTPA capacity in Argentina. The company has reached Final Investment Decision on redeploying the FLNG Hilli (2.45 MTPA) and signed agreements for a new MKII FLNG (3.5 MTPA).

The commercial structure provides exceptional revenue visibility: $285 million annual charter hire for Hilli (starting 2027) and $400 million for MKII (starting 2028). Both include a commodity-linked component giving Golar 25% of FOB prices exceeding $8/mmbtu, creating $100 million in additional annual revenue for each $1/mmbtu above this threshold once both vessels operate.

The project will monetize Argentina's Vaca Muerta formation—the world's second-largest shale gas resource. Having both vessels in proximity creates operational synergies, while comprehensive governmental support (including a 30-year export authorization and qualification for investment incentives) substantially reduces regulatory risk.

Golar's 10% equity stake in SESA creates strategic alignment with major producers including Pan American Energy, YPF, Pampa Energia, and Harbour Energy. The consortium structure ensures robust gas supply through committed Gas Sales Agreements, with plans for a dedicated pipeline from Vaca Muerta to strengthen infrastructure support.

Financial Analyst

Golar locks in $13.7 billion earnings backlog through innovative dual FLNG contracts with minimal downside risk and significant upside potential.

These 20-year FLNG agreements fundamentally transform Golar's financial profile by adding $13.7 billion in contracted earnings backlog. The implementation timeline (Hilli in 2027, MKII in 2028) establishes a clear growth trajectory, with combined fixed annual revenues reaching $685 million once both vessels operate.

The financial structure brilliantly balances stability and upside through three mechanisms: 1) Fixed charter rates ($285M/year for Hilli, $400M/year for MKII); 2) A commodity-linked tariff providing 25% of FOB prices above $8/mmbtu; and 3) A 10% equity stake in SESA for additional commodity exposure.

Downside protection is comprehensive—while charter hire can be reduced when prices fall below $7.5/mmbtu (floor of $6/mmbtu), the maximum accumulated discount is capped at $210 million across both contracts. Importantly, any discounted amounts must be repaid when prices recover above $7.5/mmbtu, effectively creating a temporary deferral rather than permanent reduction.

The early termination provisions (12-year minimum for Hilli, 15-year for MKII) with three-year notice requirements provide reasonable contract security. Built-in US-CPI adjustments to charter rates offer inflation protection, while the $13.7 billion backlog figure excludes both these adjustments and commodity upside, suggesting potential additional value beyond the stated amount.

Golar LNG Limited (“GLNG”, “Golar” or “the Company”) is pleased to announce the Final Investment Decision (“FID”) and fulfilment of all conditions precedent for the 20-year re-deployment charter of the FLNG Hilli Episeyo (“FLNG Hilli” or “Hilli”), first announced on July 5, 2024. The vessel will be chartered to Southern Energy S.A. (“SESA”), offshore Argentina. In addition, Golar and SESA have signed definitive agreements for a 20-year charter for the MKII FLNG, currently under conversion at CIMC Raffles shipyard in Yantai, China. The MKII FLNG charter remains subject to FID and the same regulatory approvals as granted to the FLNG Hilli project, expected within 2025.

Key commercial terms for the respective 20-year charter agreements include:

• FLNG Hilli (nameplate capacity of 2.45 MTPA): Expected contract start-up in 2027, net charter hire to Golar of US$ 285 million per year, plus a commodity linked tariff component of 25% of Free on Board (“FOB”) prices in excess of US$ 8/mmbtu.
• MKII FLNG (nameplate capacity of 3.5 MTPA): Expected contract start-up in 2028, net charter hire to Golar of US$ 400 million per year, plus a commodity linked tariff component of 25% of FOB prices in excess of US$ 8/mmbtu.

The two FLNG agreements are expected to add US$ 13.7 billion in earnings backlog to Golar over 20 years, before adjustments (based on US-CPI) to the charter hire and before commodity linked tariff upside. For every US$ 1/mmbtu above the US$ 8/mmbtu, the total upside for Golar will be approximately US$ 100 million when both FLNGs are in operation. Subject to a 3-year notice and payment of a fee, SESA may reduce the term of the agreement to 12 years for the FLNG Hilli and to 15 years for the MKII FLNG.

The commodity linked tariff component is upside oriented. Golar will make 25% of realized FOB prices above a threshold of US$ 8/mmbtu, with no cap to the upside for gas prices. Golar has also agreed to a mechanism where the charter hire can be partially reduced for FOB prices below US$ 7.5/mmbtu down to a floor of US$ 6/mmbtu. Under this mechanism, the maximum accumulated discount over the life of both contracts has a cap of US$ 210 million, and any outstanding discounted charter hire amounts will be repaid through an additional upside sharing if FOB prices return to levels above US$ 7.5/mmbtu. Golar is not exposed to further downside in the commodity linked FLNG charter mechanism.

SESA is a company formed to enable LNG exports from Argentina. SESA is owned by a consortium of leading Argentinian gas producers including Pan American Energy (30%), YPF (25%), Pampa Energia (20%) and Harbour Energy (15%), as well as Golar (10%). The gas producers have committed to supply their pro-rata share of natural gas to the FLNGs under Gas Sales Agreements (“GSA”) at a fixed price per mmbtu before adjustments (based on US-CPI). Golar’s 10% shareholding in SESA provides additional commodity exposure.

The project has received the full support of the National and Provincial Governments in Argentina that granted all necessary approvals including (i) the first ever unrestricted 30-year LNG export authorization in Argentina; (ii) qualification for the Incentive Regime for Large Investments (“RIGI”); and (iii) provincial approval by the province of Río Negro for the offshore and onshore Environmental Impact Assessments for FLNG Hilli.

The FLNGs will be located in close proximity of each other, offshore in the Gulf of San Matias Gulf in the province of Rio Negro, Argentina. The vessels will monetize gas from the Vaca Muerta formation, the world’s second largest shale gas resource, located onshore in the province of Neuquen, Argentina. FLNG Hilli will initially utilize spare volumes from the existing pipeline network. SESA intends to facilitate for a dedicated pipeline to be constructed from Vaca Muerta to the Gulf of San Matias to serve gas supply to the FLNGs. The project expects to benefit from significant operational efficiencies and synergies from two FLNGs in the same area.

Golar’s CEO, Karl Fredrik Staubo commented: “Golar is excited to partner with the leading gas producers in Argentina in establishing the country as an LNG exporter. The vast resources of the Vaca Muerta formation will provide the LNG market with a reliable long-term source of attractive LNG supplies, and a significant contribution to Argentina. For Golar, the project adds robust earnings backlog, attractive commodity upside potential in the FLNG tariff and strong partner alignment through our shareholding in SESA.”

About SESA:
Southern Energy S.A. is a company founded in 2024 for the purpose of LNG exports of Argentinian natural gas. SESA’s shareholders comprise Pan American Energy (30%), YPF (25%), Pampa Energia (20%), Harbour Energy (15%) and Golar LNG Ltd. (10%). SESA will be responsible for procuring natural gas from the domestic market, and facilitating the necessary infrastructure to bring the natural gas to the flange of the FLNGs in the Gulf of San Matias. SESA will also be responsible for the operations of the FLNGs with support from Golar, and for the marketing and sale of the LNG produced. 

About Golar LNG Ltd:
Golar LNG Limited (“GLNG”) is a NASDAQ listed maritime LNG infrastructure company. Through its 79-year history, the company has pioneered maritime LNG infrastructure including the world's first Floating LNG liquefaction terminal (FLNG) and Floating Storage and Regasification Unit (FSRU) projects based on the conversion of existing LNG carriers. Today Golar is a leading pure play FLNG company, and the only proven provider of FLNG as a service.

FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current expectations, estimates and projections about its operations. All statements, other than statements of historical facts, that address activities and events that will, should, could or may occur in the future are forward-looking statements. Words such as “may,” “could,” “should,” “would,” “expect,” “plan,” “anticipate,” “intend,” “forecast,” “believe,” “estimate,” “predict,” “propose,” “potential,” “continue,” “subject to” or the negative of these terms and similar expressions are intended to identify such forward-looking statements.

These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Golar LNG Limited undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, unless required by applicable law.

Hamilton, Bermuda
2 May 2025

Investor Questions: +44 207 063 7900
Karl Fredrik Staubo - CEO
Eduardo Maranhão - CFO
Stuart Buchanan - Head of Investor Relations

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act

FAQ

What is the total value of Golar LNG's (GLNG) new FLNG contracts in Argentina?

The two FLNG agreements are expected to add $13.7 billion in earnings backlog to Golar over 20 years, before adjustments and commodity linked tariff upside.

When will Golar's (GLNG) new FLNG vessels start operations in Argentina?

The FLNG Hilli is expected to start operations in 2027, while the MKII FLNG is scheduled to begin in 2028.

What is the annual charter hire for Golar's (GLNG) FLNG vessels in Argentina?

The FLNG Hilli will generate $285 million per year, while the MKII FLNG will generate $400 million per year in net charter hire.

Who are the partners in the SESA consortium for Golar's (GLNG) Argentina project?

SESA consists of Pan American Energy (30%), YPF (25%), Pampa Energia (20%), Harbour Energy (15%), and Golar (10%).

What is the commodity linked tariff structure in Golar's (GLNG) Argentina FLNG contracts?

Golar will receive 25% of FOB prices above $8/mmbtu with no upside cap, and may face reductions for prices below $7.5/mmbtu down to $6/mmbtu floor.