Golar Power reaches a Final Investment Decision on Sergipe Power Project and signs 25 year FSRU agreement
October 17 2016 - 8:33AM
The board of Golar Power is pleased to announce that it has
approved taking a Final Investment Decision on the Porto de Sergipe
Project, thereby enabling CELSE, the project company, to enter into
a lump sum turn-key EPC agreement with General Electric to build,
maintain and operate a 1.5 GW combined cycle power plant in Brazil.
The executed EPC contract with General Electric, which makes up
approximately 80% of the project cost, has been structured on a
non-recourse basis to the sponsors Golar Power and Ebrasil with all
liabilities limited to the project level (CELSE).
Located near Aracaju, the state capital of
Sergipe, the 1,516 megawatt power station will be the largest
thermal power station in South America. The project will supplement
hydropower during dry seasons and help to meet growing demand for
electricity in the region. Capital expenditure for the power
station and terminal including taxes and financing costs is
estimated at BRL4.3 billion, equal to US$1.3 billion at current
exchange rates. Scheduled to deliver power to 26 committed
off-takers for 25 years from 2020 in accordance with previously
executed PPA contracts awarded by the Brazilian government in 2015,
the power project will generate a projected annual EBITDA of BRL1.1
billion based on no dispatch with further upside based on dispatch.
Payments under the executed PPA are inflation indexed and provide
for pass through changes in commodity prices to the PPA
counterparties.
In connection with the Sergipe FID, Golar Power
has entered into an Agreement to charter Golar Nanook, the November
2017 delivering new-build FSRU, for 25 years. The annual EBITDA
contribution for Golar Power is currently projected to be US$39
million with upside potential for Golar Power from FSRU capacity
not utilised by the Sergipe power plant.
Golar Power has also increased its ownership in
the Sergipe Project from 25% to 50%. The final price to be paid for
the shares will depend on the performance of the project and the
structure includes an option, which if exercised, limits the price
to US$50 million. As Golar Power had previously committed to
finance the selling shareholders' equity contribution in the
project, the ownership uplift is expected to have a limited cash
impact on Golar Power during construction. The total equity
funding from Golar Power remains unchanged at an expected US$165
million.
Golar LNG Limited has a 50% ownership interest
in Golar Power. The remaining 50% is held by Stonepeak
Infrastructure Partners. Golar Power will own 50% of the Sergipe
project and 100% of the associated FSRU.
Golar Power CEO Eduardo Antonello commented "We
are very enthusiastic with the FID of Porto de Sergipe and fully
committed to deliver the plant and terminal in accordance with the
original budget and schedule. The project shows very solid
economics and provides a strong financial foundation for Golar
Power. Through this project, Golar Power is developing a very
robust and replicable structure to enable the most comprehensive,
cost-efficient and flexible integrated gas-to-power solutions
globally. We see a huge market to develop cheaper and cleaner
energy solutions."
FORWARD LOOKING STATEMENTSThis press release contains
certain forward-looking statements concerning future events and
Golar's operations, performance and financial condition.
Forward-looking statements include, without limitation, any
statement that may predict, forecast, indicate or imply future
results, performance or achievements, and may contain the words
"believe", "anticipate", "expect", "estimate", "project", "will
be", "will continue", "will likely result", "plan", "intend" or
words or phrases of similar meanings. These statements involve
known and unknown risks and are based upon a number of assumptions
and estimates that are inherently subject to significant
uncertainties and contingencies, many of which are beyond Golar's
control. Actual results may differ materially from those expressed
or implied by such forward-looking statements. Important
factors that could cause actual results to differ materially
include, but are not limited to, those factors listed from time to
time in the reports and other documents Golar files with the United
States Securities and Exchange Commission.
New factors emerge from time to time, and it is
not possible for Golar to predict all of these factors. Further,
Golar cannot assess the impact of each such factor on its business
or the extent to which any factor, or combination of factors, may
cause actual results to be materially different from those
contained in any forward-looking statement. Golar does not intend
to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in Golar's
expectations with respect thereto or any change in events,
conditions or circumstances on which any such statement is
based.
Hamilton, BermudaOctober 17, 2016Enquiries:Golar Management
Limited: + 44 207 063 7900Brian TienzoStuart Buchanan
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