Perenco, SNH, Golar LNG strike a deal on increasing gas deliveries to FLNG

Perenco (UK/France) and Société Nationale des Hydrocarbures (SNH), the national oil company (NOC) of Cameroon, have arranged to increase the total volume of natural gas delivered to the Hilli Episeyo, a floating LNG (FLNG) vessel owned by Bermuda-registered Golar LNG.

According to a statement from Golar LNG, the parties struck a deal last week that provides for Perenco and SNH to deliver additional gas in quantities sufficient to boost the FLNG’s production capacity to 1.4mn tonnes per year in 2022. This would represent a rise of 16.67% on the vessel’s current capacity of 1.2mn tpy. It would also require the use of the FLNG’s second production train, since the companies have only been using the first of the vessel’s two 1.2mn tpy trains to date.

The statement noted that Perenco and SNH intended to drill and appraise two or three new incremental wells in 2021 and then upgrade upstream production facilities in 2022. These operations will allow the producers to sustain higher output levels into 2023 and beyond, it said.

Additionally, Golar LNG reported that the agreement between the parties gave SNH and Perenco the option to expand the FLNG unit’s production capacity by another 400,000 tpy beginning in 2023. This option will remain in place until the term of the current contract ends in 2026, it said.

Karl Fredrik Staubo, the CEO of Golar LNG, described the agreement as satisfactory. “We are pleased to announce increased capacity utilisation of our FLNG Hilli, unlocking embedded value to our shareholders by utilising more of Hilli’s 2.4mn tonnes [per year] of liquefaction capacity,” he commented. “The innovative tolling fee arrangement delivers on our announced strategy to increase our upstream LNG and gas exposure. Today’s announcement is a further testimony to Hilli’s strong track record of 100% commercial uptime since delivery in 2018, and will benefit all stakeholders involved in the project, as well as bringing us closer to our target [of reaching] full capacity utilisation of Hilli.”

The Hilli Episeyo is the first vessel in the world to be converted to an FLNG unit. According to previous reports, it began its life as one of Golar LNG’s 125,000 cubic metre tankers and was converted to an FLNG unit at the Keppel shipyards in Singapore at a cost of $1.2bn. It is anchored near the Cameroonian port of Kribi and has been in operation since May 2018.

The vessel liquefies gas from the Sanaga field, which is being developed by Perenco and SNH. The partners pipe gas from the field to an onshore treatment facility for processing before delivering it to the FLNG vessel, which operates under an agreement that generates about $40mn per quarter in tolling revenues.