FLNG Project To Monetize Argentina’s Vaca Muerta Natural Gas With 2.45-MTPA Nameplate Capacity

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July 10, 2024

ESG Review Staff

Golar LNG Ltd. (Golar LNG) has entered into definitive agreements with Pan American Energy (PAE) for a 20-year deployment of a floating liquefied natural gas (FLNG) vessel in Argentina. The FLNG project will monetize Argentine gas, tapping into the vast resources from the Vaca Muerta shale formation in the Neuquina Basin, the world’s second-largest shale gas resources. The project is expected to start LNG exports within 2027, establishing Argentina as an LNG exporter.

This strategic venture is built on a commercial foundation featuring a Gas Sales Agreement from PAE for the supply of gas and an FLNG charter agreement with Golar LNG that includes a base tariff and commodity exposure to LNG sales prices.

Golar LNG’s Hilli Episeyo FLNG vessel was built in 1976 and converted in 2023. It has 2.7 MTPA of capacity and an output of 2.45 MTPA. (Image Courtesy Of Golar LNG)

The project aims to use Golar LNG’s FLNG Hilli, with a nameplate capacity of 2.45 MTPA, providing an equivalent net tariff of US$2.60/MMBtu (based on 90% capacity utilization) with an additional commodity-linked pricing element. Golar LNG has flexibility to consider a swap alternative for one of its other suitable FLNG units.

As part of the agreements, Golar LNG will hold a 10% stake in Southern Energy SA, a dedicated joint venture with PAE, responsible for the purchase of domestic natural gas, operations, and sale and marketing of LNG volumes from Argentina. According to Golar LNG, the initiative is envisaged to be the first phase of a potential multi-vessel project that includes other large natural gas producers in Argentina.

Aerial view of Golar LNG vessel transporting cargo. (Image Courtesy Of Golar LNG)

“We are excited to enter a partnership with Pan American Energy, one of the leading energy companies in Latin America,” said Golar LNG Chief Executive Officer Karl Fredrik Staubo. “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.”

The agreements are subject to sign-off of customary conditions.