LNG

Subsea 7 SA, the European contractor listed on the Norwegian stock exchange, said it was proud to support African oil and gas development after being awarded a lean-gas project contract in the LNG-producing nation of Angola.

Subsea 7 said its “substantial” contract was awarded by Cabinda Gulf Oil Company (CABGOC), a subsidiary of US major Chevron Corp. operator of the LNG plant.

The contract is for the Sanha Lean Gas Connection (SLGC) project comprising the construction and installation of the Lean Gas Platform system in Block-0 offshore the southwest African state at a water depth of around 70 metres.

Project management and engineering would be performed from Subsea 7’s offices in Paris and Lisbon.

Subsea 7 contracts listed as “substantial” are usually worth between $150 million to $300M.

Fabrication will take place at Sonamet’s yard in Lobito, Angola, from 2021 to 2022, while offshore operations will occur from 2022 and 2023.

“We are delighted to have been awarded this contract by CABGOC, following a public tender,” said Gilles Lafaye, the Subsea 7 Senior Vice President for Africa, the Middle East and Caspian Region.

“This is the result of a long-term collaboration with the client and a track record of delivering successful projects,” added Lafaye.

“The project reinforces Subsea 7’s presence in Angola and our commitment to support Africa’s energy industry,” he stated.

Angola has taken up the rotating presidency of the Organisation of Petroleum Exporting Countries and will chair OPEC meetings during 2021 at a time of change and challenges in the industry.

Angola is the second-largest oil producer in Sub-Saharan Africa and uses associated gas to produce LNG as a clean energy source at its liquefaction plant.

The other shareholders in addition to Chevron and Angolan energy company Sonangol are BP of the UK, Eni of Italy and France’s Total.

The Angola LNG plant is located 350 kilometres north of the capital Luanda in Soyo, at the mouth of the Congo River and is one of the world’s most modern LNG processing facilities.

A pipeline network of over 500km delivers gas from offshore oil fields to the Soyo plant designed to process 1.1 billion cubic feet of natural gas per day and produce 5.2 million tonnes per annum of LNG.

Flex LNG, the growing LNG shipping company with four vessels operating and nine others on order and whose largest shareholder is a company controlled by Norwegian magnate John Fredriksen, said it completed a sale-and-charterback transaction for two vessels.

Flex completed the transaction with Hyundai Glovis Co. of South Korea, a logistics company that normally specializes in car-shipping vessels.

The Flex deal involved the 174,000 cubic metres capacity LNG carriers “Flex Endeavour” and “Flex Enterprise”. Planning for the transaction was first disclosed in April 2019.

Under the agreement, Flex LNG sold the vessels to Hyundai Glovis for a combined gross sum of $420 million, with a net consideration of $300M adjusted for a non-interest bearing seller's credit of $120M in total.

Flex explained that both carriers were then charted back for a period of 10 years.

Flex, which is listed on the Oslo bourse in Norway and the New York Stock Exchange, will have options to acquire the vessels during the term of the time-charters.

At the end of the 10-year charter period, Flex will have the right to acquire the vessels and Hyundai Glovis will have the right to sell them back to Flex for a total consideration of $150M, net of the $120M seller's credit.

The “Flex Endeavour” and “Flex Enterprise” were, together with sister ship, the “Flex Ranger”, financed under a $315m term loan facility due in 2023.

In addition to the Hyundai Glovis deal, Flex said it also closed the refinanced the remaining payment tranche for the “Flex Ranger”, and the total outstanding of $294M under the $315M facility has been prepaid in full.

Other terms and conditions are similar to the $250M financing for the 174,000 cubic metres capacity “Flex Constellation” and “Flex Courageous” announced in February 2019.

“We are very satisfied with the successful closing of the Glovis sale-and-charterback according to plan, and highly appreciate the close and good working relationship with Hyundai Glovis throughout this process,” said Oystein Kalleklev, Chief Executive of Flex LNG Management AS.

“In connection with the Glovis SCB we also decided to improve our capital structure by refinancing ‘Flex Ranger’ at better terms and conditions,” he added.

“The two transactions improve our financial flexibility to return earnings to our shareholders when market conditions improve,” stated Kalleklev.