Meet Keppel's newest cash cow

3 FLNG vessels are involved.

According to DBS, Golar signs agreement with KEP for the conversion of up to 3 FLNG vessels. According to an announcement by Golar LNG, it has entered into an agreement with Keppel Shipyard for the conversion of an existing Moss LNG carrier into a floating liquefied natural gas vessel (FLNGV), with options to convert up to two more units.

Here's more from DBS:

Golar LNG is one of the world's largest independent owners and operators of LNG carriers, and where John Fredriksen is Chairman.

KEP will undertake the engineering and conversion work. Under the agreement, Keppel Shipyard will firstly undertake a front-end engineering and design (FEED) study, expected to commence in November 2012.

Vessel conversion is expected to start around mid-2013 following the conclusion of the detailed design and engineering work scope. To accommodate customer requirements, the first unit will be developed through several stages, and is expected to be ready for production in 1Q2015.

Contract to be firmed once FEED study concludes. The proposed unit will have a capacity of up to 2m tonnes per annum (tpa) and will have 125,000 cubic meters of LNG storage capacity.

Earlier FLNG projects by Shell and Petronas were valued at US$3bn and US$2bn respectively, with production capacity of 3.6m tpa/1.2m tpa. While we understand that the conversion contract and project value will be firmed up only when the FEED study confirms the engineering and work scope, we believe the project value to KEP will be significant.

Significant breakthrough for KEP; a potentially new growth driver. We see this project as a breakthrough for KEP, underscoring its capability and execution track record, with FLNGV projects and having been awarded to Korean yards to date.

We believe this could represent a new growth driver for the group, with Golar noting opportunities in the African region where large quantities of gas are currently being flared and the infrastructure does not support large onshore LNG investments.