Golar LNG signs agreement for 20-year FLNG deployment in Argentina
Golar LNG has signed a 20-year agreement with Pan American Energy to deploy a Floating Liquefied Natural Gas (FLNG) vessel in Argentina, leveraging the Vaca Muerta shale formation's gas resources. The project, commencing in 2027, aims to position Argentina as an LNG exporter. Key aspects include a Gas Sales Agreement with PAE, an FLNG charter agreement with Golar, and the utilization of Golar’s FLNG Hilli with a capacity of 2.45 mtpa. Golar will hold a 10% stake in Southern Energy S.A., a joint venture handling gas purchase and LNG sales. The project could expand to involve other Argentine gas producers.
- 20-year agreement for FLNG deployment ensures long-term revenue.
- Utilizes Vaca Muerta's vast gas reserves, enhancing resource monetization.
- Potential multi-vessel project with further growth opportunities.
- Golar holds a 10% stake in Southern Energy S.A., increasing market footprint.
- Project commencement delayed until 2027, impacting immediate revenue.
Insights
The 20-year FLNG deployment agreement between Golar LNG and Pan American Energy is a significant development for the energy sector. This project is set to tap into the Vaca Muerta shale formation, which holds the world's second-largest shale gas resources. By monetizing these reserves, the project can transform Argentina into a key LNG exporter, diversifying its energy revenue sources and enhancing its global energy footprint. For investors, this move demonstrates Golar’s strategic expansion and resilience in the LNG market, especially with the flexibility to consider a swap alternative for a suitable FLNG unit.
Moreover, the Gas Sales Agreement and the FLNG charter agreement with a base tariff of
From a financial perspective, the joint venture with Pan American Energy and the 10% stake in Southern Energy S.A. presents a strategic alliance that could unlock significant value for Golar. The initiative not only guarantees a steady flow of domestic natural gas but also opens access to a new revenue segment from LNG sales. With a nameplate capacity of 2.45 mtpa, the project aims for substantial annual production, which could potentially result in increased cash flows and enhanced shareholder value.
The agreement to start LNG exports by 2027 indicates a long-term revenue horizon. While initial capital outlay and project risk may concern some investors, the well-defined roles and the involvement of experienced partners like Pan American Energy mitigate these risks, presenting a balanced risk-reward profile.
This partnership is likely to have broader implications for both the Argentinian and global LNG markets. By establishing Argentina as an LNG exporter, it could shift regional energy dynamics and reinforce the country's position in the global energy market. The project’s scalability, with the possibility of expanding to a multi-vessel initiative, highlights its long-term growth potential and ability to attract other major gas producers in Argentina.
Further, the Vaca Muerta shale formation's vast resources provide a competitive edge in terms of resource availability and cost-effectiveness. As the global energy market increasingly shifts towards cleaner fuels, LNG is seen as a transitional energy source. Therefore, this project is well-positioned to capitalize on the growing demand for LNG, offering investors confidence in its strategic relevance and future growth.
Golar LNG Ltd. (“Golar”) has entered into definitive agreements with Pan American Energy (“PAE”) for a 20-year deployment of a Floating Liquefied Natural Gas (“FLNG”) vessel in Argentina. The FLNG project will monetize Argentine gas, tapping into the vast resources from the Vaca Muerta shale formation in the Neuquina Basin, the world's second-largest shale gas resources. The project is expected to start LNG exports within 2027, establishing Argentina as an LNG exporter.
This strategic venture is built on a robust commercial foundation, featuring: (i) a Gas Sales Agreement from PAE for the supply of gas; and (ii) an FLNG charter agreement with Golar which includes a base tariff and commodity exposure to LNG sales prices.
The project aims to utilize Golar’s FLNG Hilli, with a nameplate capacity of 2.45 million tons per annum (“mtpa”), providing an equivalent net tariff of US
As part of the agreements, Golar will hold a
This initiative is envisaged to be the first phase of a potential multi-vessel project and it is anticipated that other large natural gas producers in Argentina will join.
Golar’s CEO, Mr. Karl Fredrik Staubo said “We are excited to enter a partnership with Pan American Energy, one of the leading energy companies in Latin America. The project will provide an international outlet for Argentina’s vast and attractive natural gas reserves, creating value to Argentina and its gas stakeholders. The project expands Golar’s global footprint, with further growth potential.”
The agreements are subject to sign-off of customary conditions.
About Golar LNG
Golar LNG is a NASDAQ listed maritime LNG infrastructure company. Through its 75-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 focused FLNG company, and the only proven provider of FLNG as a service. Golar owns the world’s largest fleet of FLNG units by annual liquefaction capacity, with a market leading operational track record.
About Pan American Energy
PAE is a leading integrated energy company in Latin America, that holds interests across the whole hydrocarbon value chain, producing 250,000 boed, with more than 2,300 million boe of net 2P reserves, and with an energy transition agenda that involves renewable power, LNG, lithium and biofuels. PAE maintains an average annual investment that exceeds US
Forward-Looking Statements
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Hamilton, Bermuda
July 5, 2024
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 duration of Golar LNG's FLNG project in Argentina?
What resources will Golar LNG's FLNG project in Argentina utilize?
When is Golar LNG's FLNG project expected to start LNG exports?
What is the nameplate capacity of Golar LNG's FLNG Hilli?
What stake will Golar LNG hold in Southern Energy S.A.?
