Golar Power has reached its final investment decision (FID) for the power generation project at the $1.3bn Porto de Sergipe Project in Brazil, in which one of Golar LNG’s floating storage and regasification units (FSRUs) will be deployed on a 25-year contract.
Golar Power is co-owned by Golar LNG and private equity firm Stonepeak Infrastructure Partners, which in July bought a 50% interest in the venture for $116m.
Subsequent to the FID, the 1.5-GW combined-cycle power plant will be built by project company CELSE, which plans to enter into a lump-sum turn-key EPC agreement with General Electric for the plant’s construction, maintenance and operation.
When completed, the facility will be the largest thermal power station in South America and will supply power to 26 committed off-takers for 25 years from 2020.
Golar Power has agreed to charter the FSRU Golar Nanook for 25 years from Golar LNG. The contract will commence as soon as the unit it delivered from the shipyard in November next year.
The charter rate for the deal was not disclosed, but Golar Power said the contract would generate $39m in annual EBITDA “upside potential for Golar Power from FSRU capacity not utilised by the Sergipe power plant”.
Golar Power has increased its ownership in the Sergipe Project from 25% to 50%, having first purchased a stake in the project during September 2015. The final price to be paid for the shares will depend on the performance of the project, the company said.
“The [Sergpipe] project shows very solid economics and provides a strong financial foundation for Golar Power,”Eduardo Antonello, the company’s CEO, said in a release.
“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.”