Argentina's SESA Reaches Final Investment Decision for Golar LNG's MK II FLNG Charter

Golar LNG has announced that Southern Energy S.A. has reached Final Investment Decision for the charter of Golar's 3.5MTPA MK II FLNG, a 20-year agreement with net charter hire of $400 million per year and a commodity-linked tariff component. The FLNG will sail to Argentina after its conversion in China and is expected to start operations in 2028. The project is subject to regulatory conditions and customary closing conditions.

Golar LNG Limited has announced that Southern Energy S.A. (SESA) has reached Final Investment Decision (FID) for a 20-year charter of Golar's 3.5MTPA MK II Floating Liquefied Natural Gas (FLNG) vessel. This agreement, which includes a net charter hire of $400 million per year and a 25% commodity-linked tariff for FOB prices above $8/mmbtu, positions Golar as a leading player in the emerging Argentinian LNG export market [1].

The MK II FLNG, currently under conversion in China, is expected to sail to Argentina in 2028 and commence operations in the San Matías Gulf. It will operate alongside the FLNG Hilli, which is expected to start its 20-year charter with SESA in 2027. Combined, the two units will have a nameplate capacity of 5.95MTPA, offering significant operational efficiencies and synergies [1].

SESA, formed to enable LNG exports from Argentina, is owned by a consortium of leading Argentinian gas producers, including Pan American Energy (30%), YPF (25%), Pampa Energia (20%), Harbour Energy (15%), and Golar (10%) [1]. The project is subject to regulatory conditions precedent and satisfaction of other customary closing conditions, which are progressing according to schedule and expected to be completed within 2025 [1].

Golar's Chief Executive Officer, Karl Fredrik Staubo, commented, "Today’s FID marks another milestone for SESA in establishing Argentina as an attractive LNG exporter and building on Golar’s position as the market leading FLNG service provider. FID solidifies $8 billion of net earnings visibility over 20 years to Golar, with attractive upside potential in the FLNG commodity tariff component and through our shareholding in SESA. We look forward to continuing to develop the SESA partnership into a leading LNG exporter in South America" [1].

This FID represents a transformative development for Golar LNG's financial stability and growth trajectory. The 20-year charter agreement with SESA for the 3.5MTPA MK II FLNG vessel establishes $400 million in annual net charter hire, supplemented by a commodity-linked tariff component of 25% of FOB prices exceeding $8/mmbtu. This structure provides Golar with both reliable base income and meaningful upside exposure to LNG price movements [2].

The combined impact of this contract alongside the previously announced FLNG Hilli deployment creates a substantial operational hub in Argentina's San Matías Gulf with 5.95MTPA total capacity. This dual-FLNG strategy enables significant operational synergies and positions Golar as the dominant FLNG service provider in the emerging Argentinian LNG export market [2].

Most critically for investors, this agreement solidifies $8 billion in earnings visibility over two decades - a remarkable achievement that dramatically reduces cash flow uncertainty. Golar's strategic 10% ownership stake in SESA further enhances potential returns through equity participation in the broader project success [2].

This contract reinforces Argentina's emergence as a significant LNG exporter while cementing Golar's technological leadership in the FLNG sector. The partnership with major energy players (Pan American Energy, YPF, Pampa Energia, and Harbour Energy) provides robust counterparty strength despite pending regulatory approvals. The expected 2028 contract start aligns with projected growth in global LNG demand, particularly from Asian markets seeking supply diversification [2].

References:

[1] https://www.globenewswire.com/news-release/2025/08/06/3128725/0/en/Final-Investment-Decision-for-20-year-charter-of-MK-II-FLNG-to-Southern-Energy-in-Argentina.html

[2] https://www.stocktitan.net/news/GLNG/final-investment-decision-for-20-year-charter-of-mk-ii-flng-to-hbqjpdxwby8r.html