Golar LNG signs EPC deal for $2.2-B MK II FLNG conversion project
Golar LNG Limited announced that it has signed an engineering, procurement and construction (EPC) agreement with CIMC Raffles (CIMC) for a MK II floating LNG production (FLNG) vessel with an annual liquefaction capacity of 3.5 MMtpy. Under the agreement with CIMC, Black & Veatch will provide its licensed PRICO® technology, perform detailed engineering and process design, specify and procure topside equipment and provide commissioning support for the FLNG topsides and liquefaction process, similar to Black & Veatch’s role in the construction of Golar’s existing assets, the FLNG Hilli and FLNG Gimi.
The Golar MK II design is an evolution of the MK I design of FLNG Hilli and FLNG Gimi and is also based on the conversion of an existing LNG carrier to an FLNG. The MK II design allows for a modularization of the construction process as well as further efficiency and operability advances based on learnings from previous experience on constructing and operating our existing FLNG assets. The project will utilize the Golar owned LNG carrier Fuji LNG with a storage capacity of 148,500 m3. The total EPC price is $1.6 B. The total budget for the MK II FLNG conversion is $2.2 B, inclusive of the conversion vessel, yard supervision, spares, crew, training, contingencies, initial bunker supply and voyage related costs to deliver the FLNG to its operational site, excluding financing costs. The MK II FLNG is expected to be delivered in Q4 2027. Out of the total conversion price, Golar has already spent $0.3 B to date inclusive of the conversion candidate, engineering and long lead items which are now 63% complete.
Yard selection for the MK II FLNG conversion was concluded two years ago. CIMC, Black & Veatch and Golar have subsequently spent approximately 350,000 man-hours optimizing the conversion process and de-risking project execution. As part of the EPC agreement Golar has also secured an option for a second MK II FLNG conversion slot at CIMC for delivery within 2028.
The 2027 delivery makes the MK II FLNG the earliest available floating liquefaction capacity globally. Based on potential charter terms in line with the most recent long term FLNG charter agreements, the MK II FLNG has earnings potential of approximately $0.5 B of adjusted annual EBITDA, before commodity exposure.
Golar CEO, Karl Fredrik Staubo commented: “We are pleased to announce the ordering of a MK II FLNG, a significant milestone for Golar and our partners CIMC and Black & Veatch. The ordering of the MK II FLNG strengthens Golar’s position as the market leading owner of FLNGs, increasing our controlled liquefaction capacity by about 70% to 8.6 MMtpy. With a delivered price of around $600/t of liquefaction capacity and an attractive Q4 2027 delivery, we believe today’s FLNG order is well positioned to offer prospective clients an attractive time-to-market to enable gas monetization, whilst driving value for Golar. We look forward to working with CIMC and Black & Veatch towards another successful FLNG delivery and hope to further expand the relationship with potential additional MK II FLNG units.”
Wang Jianzhong, CEO and President of CIMC Raffles, stated that “The signing of this new project further solidifies CIMC’s leadership position in offshore projects. It demonstrates CIMC’s ability to handle large, complex projects that meet the highest industry standards. CIMC will continue to focus on the independent development and manufacturing of high-end offshore equipment, committed to providing high-quality, innovative solutions for the global energy market.”
Black & Veatch’s Fuels & Natural Resources sector President Laszlo von Lazar said “We are pleased to be working with CIMC and Golar on the MK II FLNG, following our support for Golar’s two previous Floating LNG assets. The MK II represents our 6th floating LNG project to take a final investment decision utilizing our industry leading PRICO® liquefaction technology. The MK II demonstrates a clear commitment to reliable, consistent energy through Floating LNG, to help meet global demands during the energy transition.”
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