Italy's Snam Buys Golar Tundra FSRU for $350M

Italian gas group Snam has agreed to buy Golar LNG's floating storage regasification unit (FSRU) Golar Tundra for $350 million.

The Golar Tundra can operate both as an LNG carrier and as an FSRU. The vessel, built in 2015, has a storage capacity of around 170,000 cubic meters of LNG and a continuous regasification capacity of 5 billion cubic meters per year.

In order to maximise its regasification capacity, the vessel will be located in central-northern Italy, close to the areas with the greatest gas consumption. The Golar Tundra is expected to start operations as an FSRU during the spring of 2023, subject to the completion of authorization, regulatory processes, and the construction of the necessary infrastructure connecting the terminal to the existing gas transport network.

Snam CEO Stefano Venier commented: "With the purchase of the Golar Tundra, Snam is taking a decisive step to enhance the security and diversification of Italy's energy supplies, in line with its mission. The role of the new FSRU for the benefit of our country will be essential: alone it will contribute to about 6.5% of domestic needs thus bringing the country's regasification capacity to over 25% of the demand. 

"Snam completed the transaction quickly and effectively in a highly competitive market due to the scarcity of supply and is continuing its efforts to acquire a second FSRU of a similar size, for which exclusive negotiations are currently underway and expected to be finalized by end of June". 

This is the second FSRU deal signed between two companies in the past two weeks. In mid-May Snam signed a contract with Golar LNG under which Golar will deliver the existing LNG Carrier "Golar Arctic" as a floating storage and regasification unit (FSRU), too. Read More.

Commenting on the Golar Tundra agreement, Golar CEO Karl Fredrik Staubo said Wednesday: "We are pleased to have reached an agreement for Golar Tundra with Europe's largest natural gas infrastructure owner. Today's announced sale marks the second transaction between Golar and Snam for two independent FSRU projects in Italy in a short period of time. We are pleased to work with Snam for the successful start-up of the LNG terminals, and to contribute to Europe's drive towards energy security.

"With the sale of Golar Tundra, Golar reinforces its focus on FLNG, enabling efficient production of proven gas reserves allowing customers to further diversify gas supply." 

As part of the transaction, Golar will lease Golar Tundra from Snam as an LNG carrier for a limited period of time after closing, and assist Snam in the preparatory work for the installation of the vessel in the selected port.

 The completion of the transaction occurred simultaneously with the signing of the contracts and will be financed by Snam out of its own resources. In the coming months Snam will begin activities to contract LNG regasification capacity, which will gradually become available from start-up of Golar Tundra as an FSRU expected during the spring of 2023.

In a floating production report issued Tuesday, World Energy Reports noted an significant uptick in the number of FSRUs leased on a long-term basis over the past few weeks. 

"Seven FSRU long-term leases were signed in May by European utilities scrambling to replace Russian gas pipeline deliveries. These leases pretty much vacuumed up most of the available FSRUs that had been looking for terminal contracts. Driving the order surge has been the threat of a partial or complete shutdown of Russia’s pipeline gas to Europe," WER said. Read More