Update: Shell scraps FLNG order at SHI

(Updated with a statement by a Shell spokesman)

South Korean shipyard, Samsung Heavy Industries on Thursday informed that the Hague-based LNG giant Shell cancelled a multi-billion order for three floating LNG producing units. 

The order was placed in June last year with a price tag of 5.27 trillion Korean won (approx. US$4.7 billion at the time of order) with the delivery set before the end of November 2023, SHI revealed in a filing to the Korean Stock Exchange.

The initial deal was signed for three FLNG hulls, while the entire contract, including the construction of topsides, was to be confirmed in the second half of 2016 when front-end engineering and design is completed.

The order was a part of the Woodside-led multi-billion Browse FLNG project in Australia. Earlier this year, the Browse JV partners, including Shell, decided not to move ahead with the FLNG project due to plummeting oil and gas prices.

“Following the decision by the Browse Joint Venture Partners not to proceed with the current concept for Browse due to the prevailing economic and market environment, we can confirm that the FEED contract for Browse FLNG with the Technip-Samsung Heavy Industries Consortium (TSC) has been terminated by the Operator,” a Shell spokesman said in an emailed statement to LNG World News on Thursday.

“Consequently, the Engineering, Procurement, Construction and Installation (EPCI) contract for Browse FLNG is no longer required and has also been terminated. However, this EPCI contract had no monetary value – it would only have been activated once final cost numbers were determined in FEED to support an FID, and a Notice to Proceed issued, followed by a transfer of the contract to the Browse Operator,” the spokesman said.

The Browse FLNG development concept was based on three FLNG facilities utilising Shell’s technology to commercialise the Brecknock, Calliance and Torosa fields located approximately 425 kilometres north of Broome in Western Australia. The three fields are estimated to contain gross contingent resources of 15.4 Tcf of dry gas and 453 million barrels of condensate.

Woodside’s participating interest in the Browse resources is 30.6%, Shell owns 27% in the Browse JV while BP holds a 17.33% stake. Japan Australia LNG (MIMI Browse) has a 14.40% stake in the JV, and PetroChina holds a 10.67% stake.

LNG World News Staff