Golar LNG and NNPCL Reach Agreement for Collaborative Gas Development in FLNG Venture
In its Q2 2023 financial report, covering the period until June 2023, Golar LNG revealed the execution of heads of terms with NNPCL. This agreement pertains to the collaborative development of gas fields through the utilization of floating liquefied natural gas (FLNG), thus extending the scope of the initial Memorandum of Understanding signed in April 2023.
Golar’s statement read, “Strong progress with the potential deployment of Golar’s FLNG vessels to various gas fields in Nigeria has been made since signing the MOU with NNPC in April. Under a further head of terms signed with NNPC on August 1, 2023, Golar and NNPC have agreed an integrated contractual framework for the joint development of specific gas fields towards potential FLNG projects. The relevant fields could fully utilize FLNG Hilli following the end of her current contract in mid-2026 or utilize a MKII FLNG.
Also Read: FG Mulls Selling NNPC Stakes in Oil and Gas Assets, Targets $17.4 Billion
“Development of commercial opportunities also continues outside Nigeria for FLNG Hilli and our prospective MKII FLNG, including commercial term negotiations with gas resource owners and government interaction in potential countries of operation. The complexity of offshore gas developments drives the timeline for potential announcements of binding terms for incremental FLNG work. We continue to develop our potential MKII FLNG project with an annual capacity of 3.5MTPA. The cost of a converted FLNG Fuji is expected to be around $2.0 billion, equivalent to approximately $570 per ton. Financing proposals for between $1.2 to $1.5 billion, that are not contingent on an employment contract are being discussed.”
Four months ago, NNPC Limited entered into a Memorandum of Understanding (MoU) with Golar LNG, aiming to construct a floating liquefied natural gas facility in Nigeria. This endeavor is intended to bolster the nation’s domestic gas utilization while also augmenting gas export capabilities.
NNPCL’s statement read, “In furtherance of its efforts to deepen Nigeria’s domestic gas utilization and enhance gas export, Nigerian National Petroleum Company Limited has signed a Memorandum of Understanding (MoU) with a Norwegian company, Golar LNG (GLNG), to build a Floating Liquified Natural Gas (LNG) plant in Nigeria.”
About Golar LNG
Golar LNG was founded when Gotaas-Larsen entered the LNG market in 1970 with the acquisition of LNG Carrier, Hilli. The company transitioned from being a downstream LNG company to a midstream floating solution provider by converting an existing LNG carrier into a floating storage and regasification unit (FSRU). In 2014, Golar LNG entered into an agreement with Keppel, initiating the construction of the world’s inaugural ship-to-floating liquefied natural gas vessel (FLNGV) conversion – the Golar Hilli.
Also Read: Tinubu’s Government May Sell Down NNPCL Assets, However, Can it Work?
At the moment, Golar LNG has carried out 7 LNG carrier conversions, and over 6 million tonnes of LNG have been produced by FLNG Hilli.
Background Story on FLNG Hilli
Based on the agreement signed with NNPCL, it is observed that Golar intends to utilize the FLNG Hilli in Nigeria after the facility ends its current contract by 2026. FLNG Hilli is currently located offshore Kribi, Cameroon, and has been there since 2018. In 2022, the vessel had a production volume of 1.4 million tonnes.
An alternative choice involves the MKII FLNG, which is currently undergoing the conversion process to become a 3.5 million tonnes per annum (mtpa) FLNG facility. This conversion is being executed on the LNG carrier Fuji LNG, originally constructed in 2004. As things currently stand, the earliest possible time frame for commencing gas production from the floating gas vessels is in the year 2026.
In other news, the NNPCL has also signed a head of terms agreement with UTM Offshore to develop Nigeria’s first indigenous floating LNG project. The FLNG from UTM Offshore is expected to have a production volume of 1.5 MTPA.
