BP and Bermuda-based firm set FLNG payment dispute to rights

Bermuda-headquartered owner and operator of liquefied natural gas (LNG) midstream infrastructure Golar LNG has made arrangements with the UK-based energy giant BP to put into effect a commercial reset for a floating liquefied natural gas (FLNG) unit which will work at a gas project off the coasts of Mauritania and Senegal, where first LNG is anticipated by year-end.

By entering into commercial reset arrangements for the FLNG Gimi, the duo has simplified contractual cash flows and settled previous disputes related to payment mechanisms for pre-commercial operations date (pre-COD) contractual cash flows.

As a result, an updated schedule of daily payments, agreed upon until the commercial operations date (COD) and secured by long stop dates, have step-up mechanisms based on project milestones up to COD.

In addition, Golar will be entitled to certain lump sum bonus payments, subject to achieving certain project milestones. These pre-COD cash flows are expected to be deferred on the balance sheet and amortized over the 20-year contract term from COD.

“The commercial reset settles all ongoing disputes including the current arbitration process and re-aligns the parties towards reaching COD. To shorten the time to COD the parties have also agreed to start the commissioning of FLNG Gimi with an LNG cargo prior to the availability of gas from the FPSO,” highlighted Golar LNG.

After departing from Singapore’s Seatrium shipyard in November 2023, the FLNG Gimi arrived in January 2024 at BP’s Greater Tortue Ahmeyim (GTA) liquefied natural gas (LNG) project off the coasts of Mauritania and Senegal.

The vessel was converted from a 1976-built Moss LNG carrier to a floating LNG production unit. The GTA development’s first phase is slated to produce around 2.3 million tons of LNG per year. On the other hand, the FPSO Tortue started its journey to the GTA project in January 2023 from Qidong, China, after completing a series of sea trials following construction at Cosco Shipping Heavy Industry over three and half years. 

However, inspection and repair of the fairleads were required at Tenerife Shipyards in the Canary Islands before it made its way to the project site, traveling more than 12,000 nautical miles to reach its destination. 

The GTA Phase 1 development, which is said to have the deepest subsea infrastructure in Africa with wells in water depths of up to 2,850 meters, is expected to produce around 2.3 million tonnes of LNG annually for over 20 years.

According to BP’s partner, Kosmos Energy, the Greater Tortue Ahmeyim LNG project continues to make good progress, with the drilling of the first batch of four wells completed. While the hub terminal has been handed over to operations, the final subsea connection work is ongoing, with mechanical completion for the first gas expected this month.

The FPSO mooring operations were completed, all risers were installed in June, and commissioning of the vessel is ongoing with handover to operations targeted in September while the first gas is expected shortly afterward.

The GTA partnership, which is working with the vessel operator to advance commissioning work, plans to bring in pre-commissioning cargo to accelerate the cool-down of the vessel later this month. The first LNG is currently expected in the fourth quarter of 2024.

Recently, Golar LNG struck a deal with Pan American Energy (PAE), a Latin American integrated energy company, for a multi-year use of an FLNG to leverage Argentina’s prolific natural gas resources, positioning the South American country for further LNG expansion.