In a move that analysts say could loosen the grip on liquefied natural gas (LNG) production enjoyed by oil majors, Norwegian shipper Golar LNG ordered its first floating LNG plant earlier this month. The announcement set Golar’s stock soaring as analysts recommended shares in the Norwegian shipper, calling the move a big game changer. As a result, its share price rose more than 10 per cent to $43.14 (Dh158.4).
Golar agreed to convert one of its old LNG tankers into a floating LNG vessel (FLNGV), or production plant, and is eyeing African flared gas and pipeline systems as a source of supply, it said.
Singapore’s Keppel Shipyard will start drawing up designs with vessel conversion due to start around mid-2013, Golar said, in a deal analysts say may cost $600 million.
It will produce around 2 million tonnes of LNG annually.
Golar’s billionaire chairman John Fredriksen said the company retains the right to convert another two tankers. He said FLNGV will open new markets for LNG and boost production capacity at a time of bottlenecks with “massive opportunities for growth in the next five to ten years”.
“If successful, a massive value transfer from oil companies to Golar LNG could emerge as the current LNG production cartel could be broken,” international ship and offshore broking company RS Platou Markets said in a client note.
The global LNG market is controlled by a handful of state and private companies, such as Shell and BG Group, as the high cost of developing plants has prohibited the entry of independent players.
The move also underscores the growing attraction of LNG, with demand due to grow rapidly over the next decade.