Golar LNG ends Norsk Hydro supply deal: Update

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Shipowner and project operator Golar LNG has terminated a preliminary agreement to supply LNG to fellow Norwegian firm Norsk Hydro's Alunorte aluminum smelter in Brazil's northern Para state.

The agreement, signed in July this year, was slated to come into force in the first half of 2022, but was terminated through mutual agreement between the two parties, Golar said. The firm did not offer a reason for the termination.

In a statement, Hydro said its decision to terminate the memorandum of understanding is based on the "provisions of the agreement" and added that it is committed to pursuing natural gas as an energy source for the smelter.

The termination of the sales agreement will not affect Golar's intention to proceed with its planned Barcarena LNG import terminal, the firm noted, estimating that there remains about 1.8mn t/yr of potential LNG demand currently met by other fuels but that could be replaced by regasified LNG from the terminal. The import project remains on track to start up in first half 2022, Golar said.

The announcement comes as Golar faces a series of setbacks in its Brazilian LNG business after its former chief executive Eduardo Antonello was implicated in a recent plea deal with Brazilian state prosecutors in the sweeping Car Wash corruption probe, which dates back to 2014 when he was working with Norwegian contractor Seadrill. Paul Hanrahan has replaced Antonello as chief executive of Golar's Brazilian operations.

As a result of the corruption allegations, Golar LNG was forced to cancel an IPO for its Brazilian LNG and energy unit on the Nasdaq stock exchange scheduled to take place in September. Golar LNG is also facing a series of class-action lawsuits from investors that purchased shares between April and September.

Brazilian state-controlled Petrobras disqualified Golar Power from participating in a tender to lease its 20mn m³/d LNG import terminal and associated pipeline in Bahia state. Golar has appealed the decision.

By Samuel Good