LNG infrastructure and services firm Golar has agreed to charter its MK II floating LNG (FLNG) unit to Argentinian firm Southern Energy (SESA) for a 20-year term, the midstream LNG company announced on October 23.

The MK II FLNG unit boasts a production capacity of 3.5mn tonnes per year (tpy) and will be deployed in the Gulf of San Matias, offshore Argentina. The cost of the long-term charter is estimated at $400mn annually and $8bn over the course of the 20-year charter. For Golar, the charter agreement also includes a 10% equity interest in SESA.

Conversion work is continuing at the CIMC Raffles shipyard at the Yantai port in northeast China. The vessel is projected to be delivered before the end of 2027 and commence operating in 2028. MK II FLNG will operate adjacent to Golar’s Hilli FLNG.

Singapore-based Seatrium’s Hilli FLNG is also undergoing conversion work now and is expected to finish refurbishment in the second half of 2026. The 2.45mn tpy is expected to begin commercial operations in 2027.

“Following today’s confirmation of the 20-year charter for the MK II FLNG in Argentina, each of Golar’s three existing FLNGs now holds 20 years of earnings visibility, representing a combined EBITDA backlog of $17 billion before attractive commodity exposure,” Golar LNG’s CEO Karl Fredrik Staubo said in a statement.

YPF’s Argentina LNG project is being developed in three phases with different international partners.

Argentina is in the midst of putting preparations in place to monetise the vast Vaca Muerta gas reserves through LNG exports. The Vaca Muerta shale formation has the world's second largest shale gas reserves.

The project was granted key government approvals already for a 30-year LNG export license in August. It represents a total investment of more than $15bn over 20 years.

SESA is a consortium of leading Argentine gas producers, including Pan American Energy (30%), YPF (25%), Pampa Energia (20%), as well as the UK’s Harbour Energy (15%), and Bermuda’s Golar LNG (10%).