Golar LNG by the end of this year hopes to finalise a long awaited agreement with Paris-based Perenco regarding the expansion of production from its Hilli Episeyo floating liquefied natural gas vessel off Cameroon, writes Iain Esau.

Also by end-2019, New York-listed Golar LNG aims to have gathered sufficient data to judge whether its FLNG solution will be viable for Noble Energy’s Leviathan gas field off Israel, where the contractor is in direct competition with Belgium's Exmar.

Two trains with a total capacity of 1.2 million tonnes per annum have been operating on Hilli Episeyo since it began production at the Kribi field in 2017, with two trains of the same combined capacity still unused.

Golar LNG’s chief executive Iain Ross recently told analysts that talks continue with Perenco about increasing throughput and potentially the duration of the contract.

“We remain optimistic that we will have this resolved by year-end. Hilli is performing well and is ready to accept more feed gas," Ross said.

“We believe there's a deal to be done that extends the volume and the duration of the contract (and) I hope to have more detail in the next quarter.”

However, speaking during the company’s second-quarter results call, he stressed that Perenco “has a responsibility to provide us with the gas and sell the LNG product".

The initial focus of discussions is on using train three and the contract adjustments necessary to ensure that the export of additional LNG at current prices is an attractive proposition for all parties, explained Ross.

The Hilli contract is currently set to expire in 2025.

“I really think there’s a will from both sides to find a solution. It’s up to our customer to determine how much additional gas it wants to commit to.”

Ross added that, because Perenco is a privately-owned company, it can change its mind about development plans without having to consider disclosure obligations.

“So, we sometimes struggle to get the full story out of what's happening," he said.

On the Leviathan front-end engineering and design contest, Ross said Golar LNG is being supplied with data from the project partners that will help assess if its Mark 3 FLNG design — with a capacity of up to 5 million tpa — could be deployed at this deep-water location.

“Essentially, by the fourth quarter, we will have an assessment of the metocean conditions, the process design, the cost and the schedule and we will be able to go back and see if our vessel is competitive in that environment.”

Meanwhile, conversion works in Singapore on the Gimi FLNG vessel — to be used on BP’s Greater Tortue Ahmeyim project off Mauritania-Senegal — is said to be on schedule and on budget.

This vessel is expected to cost $1.3 billion, excluding financing costs, and has been chartered for 20 years starting in the fourth quarter of 2022.

Separately, Ross reported that interest in new FLNG projects remains strong, with several projects currently under consideration by oil majors.

“The company recently entered into agreements and negotiations with a number of major companies to assess various opportunities globally for deploying its generic FLNG vessels which, if concluded, have the potential for the counterparties to reach a final investment decision in 2020," he said.

However, the Delfin FLNG project in the US will not be one of these projects after Golar LNG pulled out of talks.

As interest in its FLNG solution grows, the contractor is working with Asian yards to find ways to standardise its vessel production and design model to achieve lower costs and more efficient financing.

As well as “high calibre customers”, Ross said Golar needs “core investors to support our equity participation” in projects.

“We have a number of organisations interested in participating in both our existing assets, our projects under development and in future portfolio projects.”

He added: “We have infrastructure funds interested in investing in our existing contracted assets (and) in future projects.”

Golar LNG posted a $113 million loss in the second quarter, compared to a smaller loss of $42 million in the prior quarter, while revenues fell from $114 million to $97 million.

The worsening net loss was caused by derivative valuation movements and one-off items, said the company.

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Golar eyes 2019 for Kribi FLNG decision