Golar supplies 1st LNG cargo for Brazil’s 1.5 GW Sergipe-I Power Project

Monday, 01 April 2019
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Norway’s Golar LNG in early March started to unload the first commissioning cargo at its Golar Nanook FSRU (floating storage and regas unit) offshore Sergipe, northeastern Brazil. The supply is designated for the Porto de Sergipe-I Power Project, a 1.5 GW combined-cycle gas power plant, developed by Golar in a joint venture with Stonepeak Infrastructure Partners.

Golar confirmed its FSRU Nanook has started to offload the natural gas supplied as Sergipe’s first commissioning cargo via FLNG tanker Hilli Episeyo. The shipment is designated for the Porto de Sergipe I Power Project, Golar said when reporting solid financial year 2018 results.

Financial close on Segipe I was reached in April 2018, whereby Golar and Stonepeak determined that CELSE (Centrais Elétricas de Sergipe), the project company 50% controlled by Golar Power, will receive $1,340 billion in non-recourse project financing.

The funds are being used to build the 1.5 GW power plant, a 34km 500KV high-voltage transmission line, an associated gas pipeline and mooring infrastructure for the integrated LNG import terminal.

For the power plant unit, GE will deliver three 7HA.02 turbines, a generator and a steam turbine. An LNG supply agreement is in place with Qatar Petroleum and ExxonMobil.

Innovative financing structure

Capital expenditure for the Sergipe-I venture, including taxes and financing costs, are estimated to reach $1,740 billion, developers said, adding the power project will generate a forecasted annual EBITDA of $323 million at current exchange rates, prior to any dispatch.

A power purchase agreement (PPA) is already in place with a local Brazilian electric utility, with the inflation-indexed payments set to provide for pass-through of fuel costs to the PPA counterparties. "This innovative financing is a ey milestone in the development of Golar Power infrastructure projects globally, and sets a precedent for financing in local currency,” commented Golar Power CEO, Eduardo Antonello.

Start of full commercial operations of the 1.5GW power station is scheduled for January 1st, 2020.

IPO of Golar Power on the cards

Looking ahead, Golar LNG stated it is seeking to pursue further FSRU-power opportunities in Brazil. License approvals for projects are making good progress, it said, notably the recent one for the Barcarena site.

“These licenses put Golar Power in a strong position to develop FSRU terminal projects, to win future power auctions, and to distribute LNG locally,” it said.

Golar currently reviews the strategic alignment of its Golar Power business. Joint venture partner may use their right to trigger an Initial Public Offering (IPO) of Golar Power given that the company has built up “significant value” over the last four years. 

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