Golar LNG Limited announced details of an expansion to its fleet, saying that it has entered into two newbuilding contracts for 162,000 cu. m. new buildings with fixed priced options for a further two with the Korean shipbuilder Hyundai Samho Heavy Industries Co., Ltd. One vessel will deliver during the third quarter of 2014 and the other will deliver during the fourth quarter of 2014.
The total cost of the two vessels is slightly above $400 million. As with Golar's existing newbuilding orders, the vessels will be delivered with tri-fuel diesel electric engines. The new engines will be more fuel efficient and will also have lower emission levels of pollutants and CO2.
The Board of Golar for months considered several options for expanding, including growth through acquisitions as well as organic growth. Particular emphasis has been given to valuations, operating efficiencies and timing of such an expansion. The Board sees significant strength in the present development in the LNG shipping market. Global LNG trade is estimated to increase by in the region of 8%-10 % per year over the next few years with further upside if US LNG exports materialize.
The newbuild route was chosen as the company has in the recent months been in discussions with several yards with respect to increasing the size of the company's new building program. The fact that ship newbuilding prices in general are under some pressure and also that the new tri-fuel engines are significantly cheaper to operate than the previous generation steam turbine ships makes newbuildings attractive. The Company believes that it is important to get new capacity delivered as early as possible in order to position Golar for the anticipated large LNG volume increases expected to come from Australia and possibly the US in 2015 - 2016.
Chairman John Fredriksen says in a comment: "We are excited to see the rapid developments in the LNG market. We clearly see LNG as one of the key parts in the future energy supply chain. The increased flexibility provided by floating production and regas solutions has transformed the LNG industry and made it significantly more competitive versus other energy types. The large global spreads in gas prices, the high growth in trade, and the tight availability of shipping gives this investment a solid foundation."
Golar is now positioned with a total of 13 modern LNG carriers including 2 FSRU's available for trading in the period 2012- 2014. In addition the company has several older vessels available.