(Reuters) – Golar LNG Ltd <GLNG.O> said on Tuesday it received a force majeure notice from a BP <BP.L> unit seeking to delay by a year receipt of a floating liquefied natural gas facility for the African Tortue Ahmeyim project.
The notice is the latest force majeure claim issued in the LNG sector that is struggling with a seasonal plunge in demand as well as the spread of the coronavirus, which has further hammered the consumption of the super-chilled fuel globally.
BP is expecting a one-year delay due to the pandemic and currently sees no possibility for reducing that time frame, according to a statement from Golar’s unit Gimi MS Corp.
BP was expected to take delivery of the facility in 2022 and charter it for 20 years to liquefy gas from its Greater Tortue Ahmeyim project on the maritime border between Mauritania and Senegal.
“While the full impact cannot yet be determined, as a reasonable and prudent operator, BP is engaging transparently and collaboratively with key stakeholders to mitigate risks,” a BP spokesman said.
“This includes issuing a Force Majeure (FM) notice to Golar in line with the terms of the lease and operate agreement dated 26 Feb 2019. This is a direct result of the ongoing business impacts due to COVID-19(disease caused by the new coronavirus).”
Golar said it was in talks with BP to establish the duration of the delay and the extent to which this has been caused by the coronavirus outbreak.
Kosmos Energy <KOS.N> owns around 28% of the project, for which first gas is projected to start flowing in the first half of 2023, but it has said it wants to reduce its stake to around 10%.
The plant is designed to produce an average of about 2.5 million tonnes of LNG per annum. The construction of the floating facility was expected to cost about $1.3 billion, excluding financing costs.
Golar also said it was talking to its main building contractor, Keppel Shipyard Ltd, to re-schedule activities to reduce its capital spending commitments for 2020 and 2021.
Companies invoke force majeure when they cannot meet their contractual obligations because of circumstances beyond their control.
(Reporting by Arathy S Nair in Bengaluru, additional reporting by Shadia Nasralla in London; Editing by Anil D’Silva and Alexandra Hudson)