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Monday, 30 November 2015 14:21

Gazprom signs 8-year contract to buy all gas from Cameroon's FLNG plant

MOSCOW. November 30, 2015 (Interfax) - Gazprom Marketing & Trading Singapore Pte Ltd (Gazprom M&T), a subsidiary of Russian gas giant Gazprom (MOEX: GAZP), has signed an eight-year contract to buy all 1.2 million tonnes of gas to be produced annually by the Hilli floating liquefied natural gas (FLNG) plant off the coast of Cameroon.

Informed sources told Interfax about this deal earlier last week.

The parties to the contract - Gazprom M&T, British-French company Perenco, London-based Golar LNG and Cameroonian state company Societe Nationale des Hydrocarbures du Cameroun (SNH) - confirmed the deal on Friday.

The field is owned by SNH and Perenco. The operator of the LNG project will be Golar, which is now converting the vessel Hilli for the project at a shipyard in Singapore. Hilli started out as an LNG tanker in the early 1970s, but after its conversion it will become a full-fledged floating LNG plant.

The plant is expected to start operating in the second quarter of 2017 and commercial shipments are expected to begin in the second half of that year. In that case, it will become the first project of its kind in Africa to go into commercial operation. Two similar projects are now in the works: Fortuna with Ophir as operator off the coast of Equatorial Guinea (2.2 million tonnes per year) and Eni's Coral plant off the coast of Mozambique (2.5 million tonnes per year).

The price of the LNG will be linked to Brent crude with a coefficient of about 11.25%, which is in line with other recently signed contracts in the industry. The price will be in the range of $7 to $8 per 1 million BTU based on a forecast Brent price of $56.80 per barrel in 2017, according to Interfax calculations.

Facts Global Energy senior consultant Siamak Adibi told Interfax that a coefficient of 11-12% is not surprising considering the situation on the market.

The agreement does not impose any restrictions on where the LNG is resold, so Gazprom M&T is expected to sell the Cameroonian LNG in Latin America, North Africa and East Asia, markets in which the company has been trying to gain a foothold for some time. (END)



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