Golar LNG partners with Pan American Energy for FLNG project in Argentina

In a significant move that positions Argentina closer to becoming a major global LNG exporter, Golar LNG Ltd. has formed a strategic partnership with Pan American Energy (PAE) to deploy a Floating Liquefied Natural Gas (FLNG) vessel. This 20-year project, set to commence operations by 2027, aims to harness the vast shale gas reserves from the Vaca Muerta shale formation located in the Neuquina Basin, recognized as the world’s second-largest shale gas resources.

Under this agreement, PAE will supply the necessary gas to Golar’s FLNG unit through a long-term Gas Sales Agreement. Golar, in return, will manage the FLNG operations under a charter agreement that not only sets a base tariff but also includes a commodity price component linked to the international LNG sales prices. The focal point of this project is Golar’s FLNG Hilli, which boasts a nameplate capacity of 2.45 million tons per annum (mtpa), ensuring an effective net tariff of US$2.6/mmBtu at 90% capacity utilization, with an additional pricing element tied to commodity rates. Moreover, Golar retains the flexibility to swap the FLNG Hilli with another suitable unit from its fleet if required.

To facilitate the operational aspects of this venture, Golar will acquire a 10% stake in Southern Energy S.A., a joint venture specifically established with PAE. This entity will be integral in managing the purchase of domestic natural gas, as well as the operations, sales, and marketing of LNG produced from the project.

The initiative is expected to be the first phase of a potentially larger multi-vessel deployment. It is anticipated that other major natural gas producers in Argentina will join this initiative, broadening the project’s scope and impact. According to Golar’s CEO, Mr. Karl Fredrik Staubo, this partnership not only marks a significant milestone for the company but also for Argentina, as it creates an international avenue for the country’s extensive natural gas reserves, thereby enhancing value for Argentina and its gas stakeholders.

The agreements between Golar and PAE are currently pending finalization of customary conditions. This project represents a pivotal development in Argentina’s energy sector, potentially setting a precedent for future LNG exports and establishing a stronger presence in the global energy market.