Liquefied natural gas (LNG) shipping company Golar LNG Limited has teamed up with private equity firm Stonepeak Infrastructure Partners to set up a joint venture company in an effort to grow in the FSRU and LNG fueled power market.
The 50/50 joint venture company, Golar Power Ltd, will offer integrated LNG based downstream solutions through the ownership and operation of floating storage and regasification units (FSRUs) and associated terminal and power generation infrastructure, according to Golar.
Under the agreement between the parties, Stonepeak said that its initial commitment to develop Golar Power is USD 290 million in new equity, however, it plans “to invest up to USD 500 million in the coming years,” Stonepeak Senior Managing Director, Luke Taylor, said.
Golar Power’s initial asset base will comprise the FSRU currently being constructed at South Korea’s Samsung Heavy Industries’ 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, expected to take FID in the second half of 2016.
Golar will also grant Golar Power a one year option to acquire 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 abovementioned assets, the company has sold a 50% interest in Golar Power to Stonepeak, which will acquire the stake for USD 117 million in cash, subscribe to USD 100 million in preference shares on closing of the deal and commit to USD 75 million in additional equity.
This, together with an additional USD 75 million funding commitment from Golar, in the period before the first quarter of 2018, including debt financing, is expected to fully finance the conversion of the two carriers to FSRUs, take delivery of the 2017 new-build FSRU and complete the financing of its share of the Sergipe Power project.
Approximately USD 214 million in ship mortgage debt and USD 217 million of remaining newbuilding capex on the FSRU is projected to be transferred to Golar Power.
The first converted vessel is expected to be available within 16 months.