Golar posts $80 million loss in Q1, says LNG shipping market remains weak

Bermuda-based Golar LNG, the owner and operator of liquefied natural gas carriers on Tuesday posted a loss of $80.1 million in the first quarter of this year.

The shipping company’s adjusted operating loss was at $41.2 million in the first quarter as compared to $31.6 million in the fourth quarter of 2015.

“Although headline shipping rates remained relatively unchanged, utilisation fell from 42% in 4Q 2015 to 24% in 1Q and revenue dropped accordingly from $20.1 million in 4Q of 2015 to $16.6 million in 1Q,”  Golar LNG said on Tuesday.

FSRU Golar Tundra

Toward the end of the first quarter, the FSRU Golar Tundra proceeded to Keppel Shipyard for minor modifications required to ensure compatibility with receiving facilities in the port of Tema, Ghana, according to Golar.

The vessel modifications were completed in May and the FSRU is now proceeding to Ghana where it is due to arrive shortly.

The Partnership is “preparing to tender notice of readiness in the very near future and payments under the contract commence 30 days thereafter.”

GoFLNG Hilli

The GoFLNG Hilli conversion project “remains on schedule and within budget” .

Preparations for pre-operations, commissioning, start-up and the development of an operations management system continue apace, Golar said.

Golar LNG added the recruitment of operations personnel has also started, the Cameroon site representative has been appointed and a mooring provider has been chosen.

Golar expects to deliver its midstream contribution to the project by the contract startup date in September 2017, while the development of the upstream part of the project is also expected to be ready in time.

Ophir’s recent announcement that it will extend the project FID to 4Q 2016 for their Fortuna field remains within Golar’s revised deadline with Keppel for issuing a notice to proceed with the conversion of the Gandria.

Weak LNG freight market

Golar noted that the weak LNG freight market continued in the early part of 2016, with the majority of fixtures coming from the Pacific basin.

However, the Pacific basin fixtures were mostly for short periods, and the largest number of idle vessels is located in the basin.  The economics turned in favour of the charterers that took advantage of the overcapacity.

There were fewer vessels and fewer fixtures in the Atlantic basin, due to subdued reload activity in Europe.

“Middle Eastern activity was light during 1Q but has picked up as we approach mid-year when the Middle East and South American importers increase gas demand,” Golar said.

Slower than expected start-ups at Sabine Pass in the U.S., Gorgon in Australia and Angola LNG in Africa have had a negative effect on the shipping market, however, vessels for the projects have been taken off the spot market.

Enarsa of Argentina recently issued a tender for 35 cargoes which stimulated chartering activity in the early part of the second quarter, although whether this results in an improvement on the first quarter remains to be seen, according to Golar.

“A gradual recovery, hand in hand with the ramp up and start-up of projects should result in improving utilisation and charter terms, initially for newbuild TFDE tonnage, and then for modern steam vessels,” Golar said.

For its part, Golar LNG decided to lay up its spot traded Golar Viking and Golar Grand, as round-trip economics result in a lower effective rate, even though rates for newbuild TFDE vessels stay at US$25,000 to $30,000 per day.

All of Golar’s ten newbuilds are currently operating inside the Cool Pool.

LNG World News Staff