A Golar LNG joint venture has been awarded a 25-year power purchase agreement (PPA) for an LNG-to-power project using a floating storage regasification unit (FSRU), setting the stage for a new ‘energy hub’ in north Brazil
Golar Power Limited, a 50-50 joint venture with Stonepeak Infrastructure Partners, was awarded the PPA to construct a 605-MW combined cycle thermal power plant by the Brazilian National Electric Energy Agency.
The LNG-to-power project will be developed by Centrais Eletricas Barcarena, a company 50% controlled by Golar Power. Located in Barcarena in the Brazilian state of Pará, the 605-MW power plant will use imported LNG to generate electricity using H-Class gas turbines. The power will then be distributed to the Brazilian national electricity grid through an existing substation.
Golar LNG will invest US$107M of the US$430M estimated to develop the project, which will be funded through a combination of debt and equity between 2022 and 2025. The equity portion will come from proceeds of the first wave of small-scale distribution in Golar Power.
In connection with the PPA, Golar Power plans to accelerate investment in a new LNG terminal at the Port of Vila do Conde, also located in Barcarena. The terminal will be operated by Golar Power, which will provide an FSRU for 25 years to supply gas for the project. Prior to commencing power plant operations in mid-2021, the terminal will be used as a small-scale LNG distribution hub, supplying natural gas for electricity generation, commercial and industrial customers, transportation and bunkering in the region.
Golar said the selection of an FSRU is underway with an anticipated FID on the project in H1 2020.
The LNG-to-power project at Barcarena is Golar’s second in Brazil. Golar’s 170,000-m3 FSRU Golar Nanook is currently on site under a 26-year charter to CELSE to supply gas to a new power plant in Porto de Sergipe, Brazil. Golar Nanook loaded a commissioning cargo for the power plant at the FLNG Golar Hilli Episeyo in Cameroon in February. The power plant will be commissioned in January 2020.
Some 1.7 mta of Golar Nanook’s 5.8 mta is expected to be tied up to the Sergipe power plant at 100% dispatch, leaving 4.1 mta of the FSRU’s nameplate capacity available, according to a Golar quarterly presentation.
Golar Power chief executive Eduardo Antonello commented, “For decades this whole region has been starving for cleaner and cheaper energy, right at the centre of one of the most prominent natural resource basins in the globe. The energy hub that will be introduced by Golar Power in the State of Pará has the potential to supply an area larger than western Europe, with millions of kilometres of river navigation routes.”
Added Mr Antonello, “We’ve been working for over three years on this endeavour, while also mapping the potential LNG applications such as road and river transportation, mining, agriculture, industries as well as largely populated areas, and now it has become a reality. Considering the environmental and social benefits, our project has the potential to displace very large volumes of diesel, coal, LPG and heavy fuel oil consumption with cheaper LNG, allowing a significant reduction of greenhouse gas emissions and creating unique technical and economic development opportunities for the local populations.”
The PPA has been awarded with a pool of nine different power distribution companies and is expected to generate fixed annual revenues of US$174M for 25 years starting on 1 January 2025. Payments under the PPA are inflation-indexed and provide for pass-through of fuel costs to the PPA counterparties.