Keppel contractor eyes Chinese yards for future vessels

Golar LNG is in talks with alternative shipyards for newbuilds.

Golar LNG is reportedly evaluating alternative shipyards to build future floating liquefied natural gas (FLNG) vessels, OCBC Investment Research said. Golar LNG had contracted with Keppel Corporation to convert its existing vessels into FLNG vessels thrice in July 2014, December 2014, and July 2015.

In a research note, OIR analyst Low Pei Han said Golar had mentioned that other shipyards may offer “more attractive payment terms and long-term financing packages”, and that they “have confidence that a Chinese solution for FLNG is viable.”

“Whilst there has been some market worry for Keppel, based on the transcripts by Golar, it appears that the discussion with non-Singaporean yards is based on using Golar’s Mark 2 design, i.e. for newbuilds. Keppel’s work, on the other hand, involves the conversion of vessels,” Low said.

The first vessel that Keppel worked on, Hilli Episeyo, has been delivered and is currently operating off Cameroon for Perenco. Hilli Episeyo is converted from the Golar LNG tanker Hilli that was originally built in 1975.

It is the world’s first vessel conversion floating LNG production unit commissioned in Cameroon, Africa, providing proof of concept for the FLNG conversion technology. According to Low, the technology is “more economical and faster to deploy than newbuilds.”

Keppel had also confirmed in April this year that it was in discussions with Golar on FLNG conversion projects for the BP Tortue field. “This would likely require the use of Gimi, and the notice to proceed is till end this year,” said Low.