One FID down for Golar's FLNG project in Argentina, one in the works

Argentina’s Southern Energy LNG export project, which now includes energy companies Pan American Energy, Pampa Energia and Harbour Energy, refiner YPF and FLNG owner Golar LNG, has taken final investment decision on an LNG export project that is targeting deployment of two of Golar LNG’s FLNGs. 

The FID has sanctioned a 20-year charter and deployment deal for FLNG Hilli Episeyo that was agreed between Pan American Energy and Golar LNG in July 2024. And the FID included a similar 20-year charter deal for a second Golar FLNG MK II.

Acquired by Golar in 2023, MK II, a 2004-built LNG carrier previously called Fuji LNG, is currently undergoing a conversion at CIMC Raffles shipyard in Yantai, China. The MKII FLNG charter remains subject to FID and the same regulatory approvals as granted to the FLNG Hilli Episeyo project, expected within 2025, according to Golar LNG.

"The project has received the full support of the national and provincial governments in Argentina that granted all necessary approvals including the first ever unrestricted 30-year LNG export authorisation in Argentina... and provincial approval by the province of Río Negro for the offshore and onshore environmental impact assessments for FLNG Hilli," Golar said in a statement on the deal.

FLNG specialist Golar said it believes the project will monetise Argentina’s gas, tapping into the vast resources from the Vaca Muerta shale formation in the Neuquina Basin, the world’s second-largest known shale gas resource.

The Southern Energy partners are targeting production start-up from Hili Episeyo around year-end 2027 with MK II expected to commence operations end 2028. Golar LNG holds a 10% stake in the Southern Energy joint venture while Pan American Energy holds a 30% managing stake. YPF has a 25% stake, Pampa Energia 20% and Harbour Energy 15%.

The FLNGs will be located in close proximity to each other, in the Gulf of San Matias off Argentina’s Rio Negro province.

FLNG Hilli will initially utilise spare volumes from the existing pipeline network. Southern Energy said it intends to facilitate construction of a dedicated pipeline from Vaca Muerta to the Gulf of San Matias to serve gas supply to the FLNGs.

Golar chief executive Karl Fredrik Staubo said, "The vast resources of the Vaca Muerta formation will provide the LNG market with a reliable long-term source of attractive LNG supplies, and a significant contribution to Argentina. For Golar, the project adds robust earnings backlog, attractive commodity upside potential in the FLNG tariff and strong partner alignment through our shareholding in SESA."

In 2023, Golar said it considers a fully utilised Hilli has annual revenue potential in excess of US$1Bn. Hilli’s nameplate capacity of 2.45M tonnes per annum (mta) is smaller than MKII’s nameplate capacity of 3.50 mta, with the total project’s nameplate capacity at 5.95 mta. Hilli’s charter nets Golar US$285M per year while MKII’s brings in a net of US$400M per year.