Golar LNG says Southern Energy has received strong interest from prospective offtakers for additional LNG volumes from its Argentina export project beyond an existing eight-year agreement to sell 2 million tonnes annually to Securing Energy for Europe.
Southern Energy, or SESA, has initiated a bidding process for additional LNG production after executing the eight-year SEFE agreement. Golar said proposals received through the process indicate strong offtaker interest, providing an early indication of demand for volumes beyond those already contracted.
SESA was formed to enable LNG exports from Argentina and is owned by a consortium of major gas producers. Pan American Energy holds 30%, YPF owns 25%, Pampa Energia holds 20%, Harbour Energy owns 15% and Golar owns the remaining 10%.
The export project is centered around Golar’s FLNG Hilli and FLNG Esperanza, which are expected to operate near one another in the Gulf of San Matías offshore Argentina. The two floating LNG vessels will provide liquefaction capacity that allows Argentina’s natural gas resources to be converted into LNG for export markets.
FLNG Hilli recently completed its eight-year contract in Cameroon and departed for Singapore for upgrades and life-extension work. The vessel is expected to begin its new 20-year Argentina contract in the second half of 2027. Golar has budgeted approximately $350 million for upgrades, positioning, operating costs, fuel and insurance during the transition.
The Hilli contract is expected to generate approximately $285 million of annual adjusted EBITDA for Golar before additional commodity-linked upside. The agreement includes an additional tariff component tied to 25% of FOB LNG prices above $8/MMBtu, which Golar estimates could add approximately $30 million annually for every $1 that achieved FOB pricing exceeds the $8 reference level.
FLNG Esperanza is also progressing toward deployment in Argentina. Conversion work remains on schedule and on budget, with more than 15 million work hours completed. The vessel is expected to complete conversion during Q4 2027 before sailing to Argentina for contract startup in the second half of 2028. Golar has invested approximately $1.4 billion in Esperanza to date, entirely through equity funding.
Esperanza’s 20-year contract with SESA is expected to generate approximately $8 billion of adjusted EBITDA backlog for Golar, equivalent to roughly $400 million annually before commodity exposure and inflation adjustments. Its commodity-linked tariff could add approximately $40 million of annual upside for every $1 that achieved FOB LNG prices exceed $8/MMBtu.
Golar also has additional exposure through its 10% ownership of SESA. Once Hilli and Esperanza are operating in Argentina, the company estimates its total commodity exposure across the FLNG contracts and SESA equity interest could reach up to $100 million for every $1/MMBtu that FOB prices are above $8/MMBtu.
Infrastructure development to support the LNG exports is advancing alongside the vessels. San Matías Pipeline, the project company responsible for an approximately 500-kilometer dedicated gas pipeline serving Hilli and Esperanza, has awarded EPC contracts for the pipeline and compressor plant. The project has also obtained RIGI investment incentive qualification and environmental approvals from Neuquén and Rio Negro, while pipeline financing discussions were described as advanced.
The strong offtaker response provides another potential commercial catalyst as Argentina develops the infrastructure required to become a larger LNG exporter. The existing SEFE agreement establishes a base of contracted demand, while the bidding process could place additional production volumes under longer-term sales arrangements.
KEY QUOTES:
“We are very pleased to have completed Hilli’s initial contract with a market leading 100% uptime throughout the 8-year contract. We would like to thank our project partners SNH and Perenco for the solid cooperation and we are motivated to hopefully work together again on gas monetization projects in Cameroon in the future.”
“We are also very pleased with the operational performance of the FLNG Gimi, producing 15% above contracted capacity during warmer ambient temperatures in summer months in Mauritania and Senegal. We look forward to getting to start-up of operations in Argentina once FLNG Hilli has conducted modification works in Singapore and FLNG Esperanza has completed her conversion. Both projects remain on time and on budget.”
Karl Fredrik Staubo, CEO of Golar LNG
