Brussels-listed Exmar reported it has received written notification of force majeure from Argentinian state oil and gas company YPF SA under the charter agreement and services agreement for the floating LNG vessel Tango FLNG
YPF claims that effects of the coronavirus pandemic both worldwide and in Argentina have hindered the energy company’s ability to perform its obligations under the agreements. Among these obligations are its ability to pay the invoices due for services performed for the period starting the second half of March 2020, said Exmar.
Based on Exmar’s Q1 2020 results, Tango FLNG contributed about 36% of the total EBITDA for the period. Exmar considers the notice of force majeure to be unlawful, has reserved its rights and is considering its best option to defend its interests. Irrespective of the outcome of the dispute with YPF in respect of the notice, Exmar is contemplating several measures to safeguard its liquidity position, which on the basis of its current forecast, is not at risk until the end of 2020.
Before Tango FLNG began producing in mid-2019, YPF estimated the FLNG vessel would generate about US$200M per year in revenues from LNG when it was fully commissioned. The state-run oil and gas company reported the FLNG vessel generated revenues of Ars1.3Bn (US$18.5M) in Q1 2020.
Tango FLNG, owned by Exmar, operates under a 10-year contract signed in November 2018, producing LNG for YPF. With a storage capacity of 16,100 m3, Tango FLNG produces 0.5 mta, liquefying gas from the Vaca Muerta, one of the largest deposits of shale gas in the world.