20-year FLNG gig in South America opening doors to LNG exports’ club for Argentina

Bermuda-headquartered owner and operator of liquefied natural gas (LNG) midstream infrastructure Golar LNG has sealed a deal with Pan American Energy (PAE), a Latin American integrated energy company, for a multi-year use of a floating LNG (FLNG) vessel, which will leverage Argentina’s prolific natural gas resources, positioning the South American country for further LNG expansion.

Envisaged as the first phase of a potential multi-vessel project, the 20-year deployment of an FLNG unit is expected to monetize Argentine gas, tapping into the vast resources from the Vaca Muerta shale formation in the Neuquina Basin, which is said to be the world’s second-largest shale gas resources. This will help establish Argentina as an LNG exporter.

While explaining that other large natural gas producers in Argentina are anticipated to come on board, Golar LNG highlighted that definitive agreements with Pan American Energy build on a gas sales agreement from PAE for the supply of gas; and an FLNG charter agreement entailing a base tariff and commodity exposure to LNG sales prices.

The project, scheduled to start LNG exports within 2027, intends to utilize Golar’s FLNG Hilli, with a nameplate capacity of 2.45 million tons per annum (mtpa), providing an equivalent net tariff of $2.6/mmBtu, based on 90% capacity utilization, with an additional commodity-linked pricing element.

However, the FLNG owner also points out that it has the flexibility to consider a swap alternative for another suitable unit. In addition, Golar will hold a 10% stake in Southern Energy, a joint venture with PAE, tasked with buying domestic natural gas, operations, and sale and marketing of LNG volumes from Argentina. These agreements are subject to the sign-off of customary conditions.

With an average annual investment that exceeds $1.5 billion and interests across the whole hydrocarbon value chain, PAE, which is producing 250,000 boed, has over 2,300 million boe of net 2P reserves and an energy transition agenda revolving around renewable power, LNG, lithium, and biofuels.

Karl Fredrik Staubo, Golar’s CEO, emphasized: “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.”

This batch of deals comes months after the Bermuda-based player disclosed discussions with the Venezuelan ministry on harnessing the country’s extensive natural gas reserves, which the firm saw as an opportunity to explore the possibilities of deploying FLNG technology within Venezuela’s energy sector.

Source: Offshore energy

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