GasLog announced that one of its subsidiaries has signed a 10-year time charter with Sinolam LNG Terminal, S.A. for the provision of a liquefied natural gas floating storage unit to a gas-fired power project being developed in Panama.
The time charter is expected to be fulfilled through the conversion of the GasLog Singapore, a 155,000 cubic meter, tri-fuel diesel electric (“TFDE”) LNG carrier built in 2010. The required modifications are such that, as well as being FSU ready, the vessel will still be able to trade as an LNG carrier following the conversion works. The GasLog Singapore’s conversion will take place in conjunction with the vessel’s scheduled 5-year special survey in the third quarter of 2020, enabling both time and cost synergies with the vessel’s regular dry-docking. The charter commences on delivery of the FSU in Panama, which is scheduled for November 2020.
Since September 2016, the GasLog Singapore has been trading in the LNG carrier spot market. The FSU contract is for a fixed period, thereby delivering 100% utilization for the duration of the charter. The FSU will also incur a lower opex than if the vessel was trading as an LNG carrier, with GasLog estimating that the charter will generate approximately $20 million of EBITDA per annum over its 10-year life.
The FSU will receive, store and send out LNG to a gas-fired power plant currently being developed near Colón, Panama, by Sinolam Smarter Energy LNG Power Company (“Sinolam”), a subsidiary of private Chinese investment group Shanghai Gorgeous Investment Development Company. The power project has signed long-term power purchase agreements with leading Panamanian utility companies as well as a 15-year LNG sale and purchase agreement with Royal Dutch Shell plc.
Paul Wogan, Chief Executive Officer, stated: “The 10-year FSU charter once again demonstrates GasLog’s ability to execute on our strategic objectives of locking in long-term stable revenues and full utilization on one of our existing open vessels. Owning and operating an FSU will also expand GasLog’s service offering. We look forward to partnering with Sinolam to deliver gas-fired power to Panama, thereby displacing coal, oil and oil products in the country’s energy mix with cleaner natural gas.”
Kenneth Zhang, Chief Executive Officer of Sinolam Smarter Energy, stated: “The LNG Floating Storage Unit is a key element of our integrated power project, and we are very pleased to welcome GasLog as a strategic partner for our commercial operations. GasLog’s entry into the project is a vote of confidence in our business platform and the attractiveness of Panama as an investment opportunity.”