-- FROM THE FULL PICTURE MAGAZINE --
"Our vision is to be the industry leader in LNG transportation services, and we can't achieve that goal by standing still." - Gary Smith, CEO, Golar LNG.
Golar LNG CEO Gary Smith (left) and Kongsberg Maritime Sales Manager Cato Franck.
The LNG transportation industry has always been driven by innovation. But in an increasingly competitive industry characterized by rapid change, being a step ahead of the competition is not only an
advantage – it's a necessity.
With its roots in Norway, a history in Asia, and headquartered in London's busy Canary Wharf, Golar LNG operates at the centre of the LNG transportation industry. The company is listed on both the
Oslo Bors and NASDAQ and has three decades serving the growing LNG industry. With such strong credentials, most companies would be tempted to play it safe. But Golar LNG insists on being a pioneer.
Five years ago, the company invested significant resources to develop a Floating Storage and Regasification Unit (FSRU) concept for LNG, and last year Golar announced that they had contracted Keppel
Shipyard in Singapore to perform the industry's first-ever conversion of an existing LNG carrier into an FSRU. While the project had contracted some interest, Golar LNG had no existing contract for the
converted vessel. So why take the risk?
"The organisation felt the greater risk was ‘business as usual'," says Gary Smith, CEO of Golar LNG. "Our vision is to be the industry leader in LNG transportation services, and we can't achieve that
goal by standing still." Smith, an Australian who spent part of his career at Shell Trading & Shipping Co. in London, joined the company in 2006. "At the time, I had no interest in running a traditional
fleet of LNG carriers," says Smith. "But after meeting with the owners and the board, I was convinced that they were committed to a more ambitious programme."
Smith notes that Golar LNG's strategy to offer energy companies more flexible midstream solutions is based on changes in the global LNG market. "Rising demand for LNG in North America and Europe has
encouraged energy companies to seek more innovative solutions to process, store, and transport LNG," he says. "The Atlantic Basin represents a very attractive market to companies with the capacity to
offer these solutions."
Smith explains that an FSRU is a semi-permanent floating LNG receiving terminal. The FSRU will receive LNG from offloading LNG carriers, and the onboard regasification system will provide gas send-out
through flexible risers and pipeline to shore. "It is a more flexible and cost-effective solution than a land based terminal, and answers many of the increased environmental concerns faced by energy companies,"
he says. "And because FSRUs are vessels, they can be moved as the situation requires."
With a fleet of 14 vessels, Golar LNG remains active in LNG transportation, some engaged in long-term contracts, others trading in the spot market. Indeed, the company has recently completed an extensive
newbuilding programme and is currently considering adding new tonnage. "Our maritime expertise continues to provide a strong foundation for our business," he says. "But we see a significant growth opportunity
in providing our customers with more flexible floating terminal solutions, and we were willing to assume the capital, technical and execution risk to make it happen."
Golar LNG's site team at the Keppel Shipyard in Singapore: Arvid Nygaard (left), Site Manager; B. Devendran, Piping & Structural Supervisor; and Idar Herland, Machinery Leader.
And recently, the risk has paid off. Last spring, Golar LNG announced that it has been awarded two ten-year time charters by Petrobras to employ two converted Golar vessels (Golar Winter and Golar
Spirit) as floating LNG storage and regasification vessels. Both vessels will be modified to permit regasification of LNG prior to delivery to Petrobras. The estimated contract value (excluding the five-year
option period) is approximately US$860 million.
According to Smith, the contracts represent a significant milestone for the company. "These contracts are likely to positively influence long-term shareholder earnings and improve the opportunity to
further optimize Golar's financing," says Smith. Indeed, the company has recently announced that it has signed a final Memorandum of Agreement with regard to the sale of the Golar Frost to OLT Offshore
LNG Toscana S.p.a, the project company in control of the Livorno FSRU project, for USD 231 million. "We are also currently negotiating another FSRU project in the Middle East," says Smith.
With a modest management staff of 20 people, Golar LNG relies on partnerships with key suppliers to achieve their goals. "MOSS Maritime provides technology for the regasification plant, Keppel Shipyards
executes the conversion, and Kongsberg Maritime has developed a vital solution for systems integration," says Smith.
The Spirit of FSRU
The Golar Spirit is a steel mono hull equipped with MOSS LNG tanks. The regasification plant will be placed in the forward section of the vessel, with the crew facilities, control room and utility
machinery situated in the aft end. Once in place, the terminal will be permanently moored alongside a pier equipped to receive high pressure natural gas via purpose built hard arms. The LNG tankers offloading
to the floating terminal will be moored on the opposite side of the pier.