Golar LNG Limited said it has entered into a 50/50 joint venture with investment vehicles affiliated with New York-based private equity firm Stonepeak Infrastructure Partners.
The joint venture company, Golar Power, will offer integrated LNG based downstream solutions, through the ownership and operation of floating storage and regasification units and associated terminal and power generation infrastructure, Bermuda-based Golar LNG said on Monday.
“Stonepeak shares Golar’s ambition to aggressively grow in the FSRU and LNG-fueled power market and is committing $290 million in new equity to develop Golar Power,” the company said.
Stonepeak Senior Managing Director, Luke Taylor, said the partnership eyes opportunities in the LNG downstream market to build and operate long-term LNG and power infrastructure.
“While our initial commitment is $290 million we hope to invest up to $500 million in the coming years,” Taylor said.
Golar Power’s initial asset base will comprise the FSRU currently being constructed at Samsung shipyard, two modern 160,000 cbm trifuel LNG carriers suited for conversion to FSRUs, and the right to invest in up to 25% of the Sergipe Power project.
According to Golar, the Sergipe Power project is progressing well and is expected to take FID in the second half of 2016. Golar will also grant Golar Power a one-year option to acquire from the company a further two LNG carriers for conversion to FSRUs. Upon closing, Golar Power will immediately commence conversion of the first LNG carrier to a FSRU.
Subsequent to the formation of Golar Power and the contribution of the assets, the company has sold a 50 percent interest in Golar Power to Stonepeak. Stonepeak will acquire its 50 percent of Golar Power for $117 million in cash, subscribe to $100 million in preference shares on closing of the deal and commit to $75 million in additional equity.
This, together with an additional $75 million funding commitment from Golar, in the period before Q1 2018, is expected to be sufficient including debt financing to fully finance the conversion of the two carriers to FSRUs, take delivery of the 2017 newbuild FSRU and complete the financing of its share of the Sergipe Power project. Approximately $214 million in ship mortgage debt and $217 million of remaining newbuilding capex on the FSRU is projected to be transferred to Golar Power, the company said.
“LNG prices are at a significant discount to oil prices and Golar Power sees a range of potential LNG importers who would benefit from a rapid switch to gas,” the statement reads.
The first converted vessel is expected to be available within 16 months. There are only three unfixed FSRU newbuildings presently under construction and delivering within the next 28 – 30 months.
Golar Power will also enter into an Omnibus Agreement with Golar LNG Partners. This agreement will govern the events upon which the Partnership will be able to acquire assets from Golar Power, the company said.