Back in May 2025, I posted on interest from Argentina-based companies for the Golar LNG (GLNG) FLNG newbuild. The company had laid out contract details, but indicated this was just discussions and there was expectations of a Final Investment Decision (FID) later in 2025. Well, per the subject line - “later” has arrived.
Announced on 08/07/25
It is a 20-year contract on paper. But, it has conditions that permit the charterers to terminate the contract after 15 years. The firm part of the contract means at least $6B of earnings. Plus, additional upside when the FOB price is above $8/MMBtu
https://seekingalpha.com/news/4481402-golar-lng-firms-up-20-year-flng-charter-in-argentina
The FID decision is huge for another reason. Prior to the FID decision, Golar LNG mgmt had indicated they would only be comfortable having one FLNG asset built on a speculative basis. Since FLNG Mark II has a contract, it is no longer a speculative asset. Furthermore, Golar LNG have an option available to build a similar asset at the same yard, as long as the order was placed prior to the end of 2025. That point aside, now that GLNG have better revenue visibility, the company has more time to place a new FLNG asset order at a time of its choosing (constraint is obviously the number of shipyards with capability of building an FLNG asset - not many).
Added to my GLNG stake in multiple accounts
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I am aware that it isn’t smooth sailing now that the FID has been signed on the Mark II asset. There is a gap period in mid-2026 into early 2027 when GLNG’s revenue will drop significantly. This is when FLNG Hilli completes its work in Cameroon, and transitions to Argentina. But, the added concern/risk of funding a yard asset during this period has been significantly reduced with the FID on said asset.
GLNG moving forward with FID on FLNG Mk II signals strong confidence in LNG demand and project economics. I see it as a bullish sign, especially if they’ve secured long-term offtake agreements. The main risk is execution—delays or cost overruns could impact returns—but the upside in today’s LNG market makes this an interesting development to watch.
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@wallyrobinett23- Thanks for stopping by, and thanks for your observations. The execution risk is there. But sometimes, it isn’t the owner’s fault. Case in point, FLNG Gimi, which had a whole fiasco related to the Covid-19 pandemic implications, delivered to charterer within the newly agreed date, and then, was unable to start in a timely fashion for a number of reasons. While there could be cost overruns or delays, I think GLNG reduced the risk as best as it could, by ordering critical components ahead of time, and has a good number of skilled staff (though it is the first Mark II conversion for them) familiar with the design. But yes, yard risk does remain. And site location risk exists too.
@wallyrobinett23 - BTW, the FID decision was not with Golar. The company had already made a decision to build the FLNG Mk II. The FID was the Argentine partners decision to hire the production asset. The groundwork had been laid out earlier in the year. The Argentine partners just had not finalized the decision until 08/07/25