Golar LNG has made its final investment decision (FID) and confirmed the fulfillment of all conditions precedent for the 20-year charter of the FLNG Hilli, which will be re-deployed off Argentina’s coast. The charter, first announced on July 5, 2024, is with Southern Energy S.A. (SESA), a consortium formed to launch Argentina’s LNG exports.
This landmark agreement is complemented by another major development: Golar has also signed definitive agreements for a 20-year charter of its MKII FLNG unit with SESA. The consortium includes key Argentinian gas producers—Pan American Energy (30%), YPF (25%), Pampa Energía (20%), Harbour Energy (15%), and Golar LNG (10%).
Dual FLNG Project Details
The MKII FLNG, currently under conversion at CIMC Raffles shipyard in Yantai, China, is subject to a separate FID and regulatory approvals expected in 2025. Together, the FLNG Hilli (2.45 mtpa) and MKII FLNG (3.5 mtpa) represent a 5.95 mtpa nameplate capacity, forming one of the world’s largest FLNG developments.
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FLNG Hilli is expected to start operations in 2027, generating $285 million/year in net charter hire for Golar, plus 25% of FOB prices above $8/mmbtu.
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MKII FLNG is scheduled for 2028, expected to deliver $400 million/year in net charter hire, with a similar commodity-linked upside.
Combined, these charters add approximately $13.7 billion in backlog over 20 years, with additional upside potential—around $100 million per $1/mmbtu above the $8/mmbtu threshold when both units are operational.
Flexible Terms & Upside Protection
SESA retains the option to shorten the charter periods—to 12 years for Hilli and 15 years for MKII—with a three-year notice and associated fee. Golar has also agreed to a floor-price protection mechanism: if FOB prices fall below $7.5/mmbtu, charter hire may be partially reduced, down to a floor of $6/mmbtu, with total discounts capped at $210 million over both contracts. Any discounts will be recoverable through future upside sharing if prices rebound.
Importantly, Golar has no downside exposure beyond the agreed floor, while retaining full upside potential with no cap on commodity-linked gains.
Gas Supply & Location
Gas for the FLNGs will be sourced from Argentina’s Vaca Muerta formation—the world’s second-largest shale gas resource—located in Neuquén Province. Initially, the FLNG Hilli will operate using spare capacity in the existing pipeline system, while plans are underway for a dedicated pipeline from Vaca Muerta to the Gulf of San Matías, where both FLNGs will be moored.
The Gulf of San Matías, in Río Negro Province, offers strategic synergies, allowing for shared infrastructure and operational efficiencies between the two FLNGs.
Strategic Importance & Global Reach
“Golar is excited to partner with Argentina’s leading gas producers in establishing the country as an LNG exporter,” said Karl Fredrik Staubo, CEO of Golar LNG. “The vast resources of the Vaca Muerta formation will provide the LNG market with a reliable long-term supply, while supporting Argentina’s economic development. For Golar, the project adds a strong earnings backlog and commodity upside, with aligned partners through our SESA shareholding.”
SESA has already obtained Argentina’s first unrestricted 30-year LNG export license, regulatory clearance under the RIGI large investment regime, and full provincial environmental approval in Río Negro.
In parallel, YPF signed an MoU with ONGC, GAIL, and ONGC Videsh of India to explore LNG offtake from the project. The move further underscores Argentina’s positioning as a new hub in the global LNG supply chain.
Conclusion
Golar’s entry into Argentina’s LNG market—through two high-capacity FLNG charters—marks a transformational moment for both the company and the country’s energy future. With firm contracts, regulatory support, and strategic partnerships in place, Argentina is poised to emerge as a significant player in global LNG exports.