Golar LNG Ltd (GLNG) 2010 Q1 法說會逐字稿

Good day and welcome to the first-quarter results 2010 conference call.

Today's conference is being recorded.

At this time, I would like to turn the call over to your host today, Mr.

Graham Robjohns.

Please go ahead, sir.

Yes, thank you very much; and good afternoon, everybody.

Apologies for the delay.

We had an unexpected false fire alarm here in our office, had to temporarily evacuate the building.

But back now here and ready to go.

My name is Graham Robjohns, and I'm joined on the call today by Oscar Spieler, CEO of Golar Energy.

Oscar is actually sitting in Singapore today.

So if we like to get straight into the presentation, moving over forward-looking statements on slide two, we come to the agenda on slide three.

The agenda today is that we will cover -- or I will cover highlights for Golar LNG Ltd.

and financial results, have a quick look at the vessel portfolio, and then we will stop and pause and open for questions specifically related to Golar LNG Ltd.

and then we will resume with a review of Golar LNG Energy.

So moving over to slide four, Q1 2010 highlights.

Clearly this has been a weaker quarter in terms of earnings, almost entirely driven by the poor performance of the vessels operating in the spot market.

Utilization was much lower at 65% for the quarter versus 93% for the fourth quarter of 2009.

Rates were also weaker, but really utilization is the key.

To keep the vessels moving in a weak market is more important than the rate actually itself.

But unfortunately in the current market, that has been somewhat difficult.

The outlook for Q2 2010 also remains challenging.

Golar LNG Energy announced recently the setting up of a new LNG trading venture, which we will come back and talk about a bit more later, but that's obviously exciting news.

We're also delighted that the Golar Freeze delivered under its time charter to the Dubai Supply Authority on May 16.

This is clearly a major project milestone and a significant achievement, building on the successful deliveries of the first two FSRUs.

It's also I think a clear indication of our ability to meet our customers' expectations, which include not only Dubai Supply Authority, but also Petrobras and effectively Shell, who is the technical advisor to DUSUP on this project.

The next major milestone of course is the commissioning and testing of the vessel, which is expected to happen late in 2010.

As we mentioned in the press release, we are also currently in the process of documenting a refinancing facility in respect to the Golar Freeze, and that is expected to conclude in the first half of June.

With the delivery of the Golar Freeze of course, Golar LNG Ltd.

had a strong cash flow outlook, and in connection with that, the Board has proposed a cash dividend of $0.05 per share this quarter, with the expectation of significant growth in that dividend in future quarters.

And moving over to slide five, financial highlights.

Operating, you can see the net income loss line we've moved from a $17.4 million net income to $2.8 million loss.

That is almost entirely driven by the worsening position on net operating revenues, driven as I said earlier by the spot vessel performance.

Also there's been an impact on other financial items, net financial expenses that have moved from $14.5 million loss to $14.6 million loss.

That's almost entirely due to the interest rate swap marked to market value gains in the fourth quarter of 2009 as opposed to losses in the first quarter of 2010.

Those of course unrealized non-cash movements.

Net interest expense without other financial items actually decreased in the quarter.

Time charter equivalent rates, not unexpectedly down from $62,470 per day in Q4 to $47,084 in Q1.

Pleasingly though, operating costs are down, operating expenses down from $13,000 per day to $11,800.

Moving over to slide six, we have the historical development of revenue and EBITDA.

And then moving on to slide seven to the detailed financial statements.

The income statement really tells the story that I've just gone through.

As I said the operating costs -- and in fact, all cost categories are down this quarter, which is pleasing, other than of course voyage expenses which is up due to the fact that when spot vessels are not being utilized or not on time charter, we as owners incur the fuel cost.

And that is the reason for the increase in voyage expenses.

Moving over to slide eight, balance sheet assets.

Not too much to say there, so we'll move straight over to balance sheet liabilities, slide nine.

One item of note, the percentage of fixed interest debt has moved down this quarter to about 65% on a group basis.

The main reason for that fall is the maturing of an interest rate swap in connection with Golar Mazo, which we're pleased to see disappear is about a $19 million swap that had been in place for quite some time, but had a swap rate of around 6%.

So that level of fixing, which amounts to about $625 million, the interest rate, average interest rates of those swaps is just slightly over 4%, around 4.25%.

Moving over to slide 10, cash flows, you can see under investing activities, that we've continued to invest in the Golar Freeze of course.

And as at March 31, there was approximately a further $30 million in spend to go to completely Golar Freeze as at March 31.

And then on slide 11, we continue the statements of cash flows.

Again, not too much to say there, moving over to slide 12, financial expenses analysis.

And you can see what I was explaining earlier, that actually net interest expense has fallen in the quarter, partly a result of the maturing of that interest rate swap on the Golar Mazo, but also slightly lower LIBOR levels.

But on the marked to market, the sort of non-cash marked to market movements, the interest rate swap was a gain of 5.1 last quarter and a loss of 2.5 this quarter, and also foreign currency retranslations moved from a gain to a loss.

And then moving over to slide 13, this will be a slide that we have discussed many times before.

The dark blue bars obviously represent the fixed-term contract periods.

And as I said earlier, of course all of those are now -- all of the vessels are now on hire under their long-term charters.

So that's a very brief summary of Golar LNG Ltd.

And if we could now break for any specific questions related to Golar LNG Ltd., I would suggest that we wait for Golar Energy questions, until we get to the end of the energy presentation.

So if I could hand you back now to the operator.

(Operator Instructions) Oleg Vukmanovic (inaudible)

I believe Golar has mentioned in the past that it's involved in a bidding process for additional FSRU projects in Indonesia, Jamaica, Israel and a few other countries as well.

Is there any chance of maybe getting an update on how that is going?

Yes, absolutely is.

Sorry to sort of put you off, but we do have some slides and explanation on that very topic in the Golar Energy presentation.

So I would say it's probably best to wait until we've gone through that and then if you've got further questions, please come back after that presentation.

(Operator Instructions) Petter Narvestad, Fondsfinans.

Can you give us a quick update on how the development is in the vessel OpEx on the spot vessels?

I think what we've been doing, we have -- we're running a type of cost cutting -- not cost cutting, but cost optimizing improvement (inaudible) so in general, OpEx will go down.

We have had some extraordinary OpEx in connection with the change of management from Shell to the other managers.

There will also be some additional cost in the next few quarters (inaudible) obviously a change of managers as well.

What we have done is that we had -- before we had three managers, and we are now going into one manager, with the aim of increasing the quality (inaudible) also to improve on the costs.

So I think on the long run, I think we will see a definite reduction in operating costs.

Can you give us a figure on what kind of OpEx we're looking at?

Do you have them, Graham?

The new vessel OpEx per day is in the region of 11,000 per day.

Is that what you were looking for?

Yes, and are we going to see that coming down from that level or is that what we could use going forward?

I think that's what we are going to use going forward.

Okay, thank you.

That doesn't include dry dock cost, does it?

No, no, no.

Jeffrey Schwarz, Metropolitan Capital.

Good morning or good afternoon or good evening, gentlemen, depending on where you're at.

I'm going -- the elephant in the room, so to speak, in my mind is the dividend and you have -- you have begun to pay a cash dividend early in fact.

You have given a good deal of guidance in the past and again today about what the rate cash flow after debt service ought to look like going forward.

You haven't given any guidance yet as to what portion of free cash flow the Company might feel comparable distributing and some of your other peers have -- do provide that type of guidance and I am wondering if that is something that you are yet ready to do, or perhaps if it's something that we might anticipate in terms of guidance come next quarter.

Yes, sure.

As you say, we have paid a dividend early.

Clearly at $0.05, it's not a whole lot, but I think part of that was to demonstrate commitment to paying cash dividends and I think we've clearly set out in the press release that we expect those dividend payments, as the freeze (inaudible) hires start to come through.

Of course we have already got the Winter coming through to increase sharply over the next few quarters.

We haven't given an absolute number on the dividend distribution, but we have guided that at a run rate free cash flow, of $72 million to $75 million a year, which is roundabout sort of between $1.05 and $1.10 per share that we would be anticipating to pay out the significant majority of that.

So as I say, we haven't put an absolute figure on it, but I would say with sort of 90%, 95% of that will be a reasonable expectation.

Graham, thanks for that guidance.

And I guess I should assume that because the freeze has gone on on hire mid-quarter, that I would imagine the second-quarter dividend will also not yet be at the typical run rate because you won't get the -- at your full run rate of cash flow, but it sounds like for the third quarter, maybe that's a time for us to be thinking of what a normal or a Golar dividend might look like.

I think that's right.

Clearly we have to reassess the situation in detail when we get there.

But the expectation is that the dividend would ramp up over a couple of quarters.

Thanks, guys, and look forward to questions on Golar Energy in a little while.

Thank you.

It appears you have no further questions at this time, sir.

Okay, thank you very much.

So we will progress then on further with the presentation on Golar Energy.

So turning over to the front cover of the Golar LNG Energy presentation, we will move to forward-looking statements on slide two and then moving over to the agenda on slide three, where we set out similar to the Golar Energy Ltd.

presentation, we will cover highlights, financial results, and then I'll hand over to Oscar to go through LNG shipping, floating, floating regasification terminals, and Golar Commodities.

Okay, so on slide four, Q1 2010 highlights.

Again as I mentioned earlier, the key item for Golar Energy this quarter is the weak spot vessel earnings.

Utilization with energy standalone was down at 50% as compared to 90% in Q4, with rates lower.

But again as I mentioned earlier, really the key here is utilization.

Rates have probably moved down around $10,000 a day.

But it's the utilization that has really damaged the earnings.

Having said that, the market fundamentals are positive in the medium to long term.

But short term particularly in connection with Q2, things are going to remain challenging.

Having said that, although we do have some additional capacity coming on stream in the second half of 2010, and that should at least make a start to rebalance the market to some extent.

As we announced just recently, Golar Energy has set up a new subsidiary to embark upon LNG trading.

The subsidiary will be called Golar Commodities.

It's long been part of Golar's stated strategy to participate in the trading of LNG.

And I think this is reiterated in the IPO of Golar Energy last August.

We believe that this is the right time within the LNG trading lifecycle, moving into a growth phase, and we believe that we also now have the right team to take that forward successfully.

And together with traditional LNG shipping services, and obviously the provision of floating terminals that we've moved into over the last few years, Golar Commodities will also enhance the overall offering to our customers and so in many ways, will be complementary to the rest of our existing business.

Floating regasification project developments have continued at a high level of activity.

Obviously nothing substantiative as yet, but activity has continued to increase and Oscar will say a little bit more about that later.

Turning over to slide five and financial highlights.

Similar to the Golar LNG Ltd.

numbers, obviously the key fall there is in net operating revenues with -- moving from $19.6 million to $9.1 million and time charter equivalent rates moving from $36,480 to $16,795.

As I said earlier, that's quite a dramatic fall, but that's probably more driven by utilization than it is in reduction of rates.

Turning over to the income statements, again similar to Golar LNG Ltd., while its revenue has fallen, we have also seen falling costs, which is pleasing.

We did make a gain on some additional sales of LNG Ltd.

shares in the quarter of about $800,000.

You actually can't see that on this income statement, as it's actually included within other financial items.

Moving on to slide seven, the balance sheet.

As you can see, there's a significant fall in the cash balance.

That's largely because of the funding that LNG is providing to LNG Ltd.

in respect of the capital expenditure on the Golar Freeze and that funding is included within other current assets.

So upon the draw-down of the refinancing facility and the exercise of Golar Energy Ltd.'s option to reacquire the Freeze from Energy, that funding will be repaid and there will be some $80 million in cash flowing back to Golar LNG Energy.

Moving over to slide eight which is balance sheet liabilities, down at the bottom, you can see there's not too much movement within the balance sheets.

Down at the bottom, you can see the percentage of fixed interest rate debt at 47%, somewhat lower than the group total and obviously Golar LNG Ltd.

standalone is a higher percentage than the group total of 65% energy, as I say, slightly lower than that at 47%.

And again, the average fixed cost, interest-only cost of that is around about a little over 4%.

Cash flow statements, the investing activities, the additions to new buildings, $17.8 million is of course as I mentioned, the additions to the Golar Freeze.

And not too much else to say actually on cash statements.

So at that juncture, I will turn you over now to Oscar to carry on the presentation, starting with LNG shipping.

Thank you, Graham.

Good morning to everybody.

We are now on page number 11.

Fortunately, I was right with my forecast on the results for Q1.

We expected (technical difficulty) vessels a lack of FOB cargoes.

In addition, we have seen a decline in the winter market very early in the year, which has resulted in a very low utilization on the rates on our spot vessels.

We have already lost weeks in some more activity with a few more inquiries with increased LNG production and change in trading patterns.

Basically we'll hopefully see an improvement in rates.

But I'm afraid that the remainder of the year will be challenging when it comes to the spot market.

Let's go over to page number 12.

On the left side, you see the fleet development.

There's a limited number of new building, as you can see, over the next few years.

The fleet today consists of 340 vessels and new building group is around 37.

We also know that a number of LNG trains will be ready to start to deliver LNG over the next 12 months like [Peru], Qatar, Libya, Yemen, (inaudible) with a total liquifaction capacity added of 38 million tonnes.

On a more long-term, there are a number of LNG projects coming up on stream and we believe we will see more and more spot cargoes as the LNG market develops.

Please move to page 13.

We're going to talk a bit about the floating re-gas market.

So the re-gas market is firming up, with a lot of serious inquiries around re-gas projects.

Pertamina has recently sent out a tender on a project in West Java which we are considering for the moment.

There are several projects in Indonesia and we believe that there will be sent out another tender within the next six months.

We have been pre-qualified for a project up in Israel.

On Jamaica, we sent out a non-confirming bid.

A few comments to this non-confirming bid.

It seems that a lot of these companies feel that FSRU providers should also take the pipe and (inaudible) work.

However, this is not our competence area.

This will result in much more expensive solutions and there are also a tendency that the companies try to structure the project like an offshore project.

Our business model is completely opposite.

Based on our recent solution (inaudible) providing the customer with a cost optimal solution.

I believe that some of the bids we have seen lately will result in a two to three times higher CapEx and resulting in delays on schedules.

However, customers are always right, and we will have to adapt to their requirements.

We have also seen more interest from other LNG players in the tenders.

This is most probably due to the depressed spot market.

We also are looking at projects in South America and Asia.

And let's go over to page number 13.

This shows the increase in LNG demand in OECD versus non-OECD countries.

And generally in order to increase the GDP in another country, you'll need to increase the average energy consumption per capita.

And what we see is that a lot of these countries consider to import LNG.

In order to do that, there is two alternatives to import LNG.

One is (inaudible) land-based terminal or a floating storage regassification unit.

A re-gas unit is cheaper and faster to develop, and will provide a customer with a more flexible solution.

CapEx is always of essence, but time is crucial as well.

And we are talking about major savings for the customer, if you are able to start up an LNG terminal two years ahead of a land terminal.

Let's move to page number 15.

As I said earlier, there are lots of interesting opportunities around the world, which is clearly shown in the map.

The countries with colors is areas where we are hovering for the moment, and where there are discussions going on.

And we believe that we are covering these markets fairly well and that we are very well known for our capacity as an FSRU provider, providing customers with cost-effective solutions and flexible solutions.

That said, it's a very challenging market to cover.

It's all around the world.

It is in undeveloped countries [in need to manage] the political aspects of importing LNG, which is very demanding.

And also in a lot of these countries, there are little knowledge about shipping and LNG industry in general.

Going over to page 16.

The group's third conversion has been delivered to DUSUP on the 16th of May.

The vessel will have to be commissioned when the customer [brings us along their jetty] and load the vessels with LNG.

This [merit] is another profit of our capability to deliver on time.

The vessel is in a ten-year time charter to DUSUP and the project has been scrutinized by Shell's technical experts throughout the project.

And we feel this is an extremely important quality stamp when it comes to acceptance of using all LNG vessels for re-gas projects, and not at least for the way we are carrying out conversions.

Moving over to our newest platform on page 17.

As Graham said, we have -- we're going to [start up a trading desk].

I will talk a bit about trading in general.

And as I said before, we believe that the LNG market will develop similarly to the crude market and the power market over time.

This development is moving in different phases and the first phase is the embryonic stage where the industry develops, [and it's thread through] large capital intensity infrastructure projects.

Often projects are final and are syndicated through partnership and through highly valuable, contractual and [active] structures.

The assets are dedicated to projects for long-term and normally with a long-term off-take purchase contracts to secure favorable financing terms.

In this stage of the industry are entirely dominated by engineering skills (inaudible).

The next step to growth stage, the industry begins to achieve a critical mass, thus promoting [technical] spot market development.

This is the stage that the LNG industry is just now entering.

It is characterized by efficient infrastructure provide alternative.

For example, in shipping and transport and supply [slack].

You've seen all phases of value chain, the tremendous inefficiency and suboptimization of assets [are real].

The slack provides opportunity for companies to step in to optimize logistics to remove inefficiencies and capture associated values.

New means evolve to manage risk through forward financial markets, new entrants with financial and superior logistical skills enter the market.

Opportunities to capture and arbitrage through lending, fiscal and financial trading capacities, capabilities.

Monetize flexibility and optionality embedded in assets.

And at the end of this stage, capital [pressures] to capture clear opportunity.

Example of this was in the crude market in the '70s and '80s, where we had entrants like (inaudible)

Then we go into the mature phase, mature stage where the inefficiencies and associated opportunities rapidly decline, and it's time to move on and harvest existing positions.

Let's move over to page 18.

The right time for LNG trading and optimization.

The LNG industry is currently dominated by engineer skill sets in major national companies and other utility companies.

Critical mass reached [allowing viables] for trading and optimization activities.

Slack now exists across the entire value chain, allowing entry at a fraction of full replacement costs.

For example in liquefaction, there are overcapacity on liquefaction I believe.

There are overcapacity on shipping, and there's also an overcapacity on re-gas.

In order to take advantage of this, this will require risk and portfolio management skills to capture these opportunities.

The growth potential and the efficiency provides very attractive opportunities for aggressive entrance via the proper experience and resources.

Going over to the last slides which describes our -- the trading philosophy of the new company.

In order to have success in trading, you need a few things.

First of all, you need the willingness and capability to manage physical commodities and assets.

Secondly, you need a strong financial capability, including risk and portfolio management, derivatives, statistics and financial theory; and last, a strong balance sheet.

We look for three sources of value from our integrated trading environment.

The first one is the arbitrage, where we have low or no risk, where we will do back to back, physical and financial.

There are many sources of this trading.

It could be location spreads in transport, it could be balance spreads in storage and so forth.

Second area is the proprietary trading dynamic and opportunistic allocation of risk capital based on our market fundamentals and capital flows.

This requires superior risk measurement and strict portfolio management discipline, and processes and balance sheet management to match proper trading activity.

The last area is the structured services, where services often very complex provided to customer on a fee basis.

This often combines arbitrage and proprietary trading characteristics.

An example is term (inaudible) risk management solution, complex statistical and financial options and (inaudible) requirements (inaudible)

And when successful, each of these complement and reinforce the other, two sources of value.

(inaudible) this is (inaudible) management, at least not my area of expertise.

However, we had a Board with extensive trading experience, both Mr.

John Fredriksen, Tor Olav Troim and Paul Adams are all very experienced in this.

And of course this is the reason why we have growth in (inaudible) and his team, and I also believe from my part of where we are presently, that there will be lots of added value between the trading desk and our shipping and project activity and vice versa.

Example could be in our FSRU project.

We're very often asked about supplying of LNG.

The trader, I can see there could be a need to find a good way to store LNG, and I think we have a solution to that.

We can definitely benefit on the shipping side, and it might also be a lot of other areas which we can develop.

I think we are all extremely excited about this opportunity and the support we've got from the Board on completing this deal with Blake and his team.

By that, I believe the next session is (inaudible)

Operator, could you now turn the call over to question and answers, please?

(Operator Instructions) Nathan Weiss, Unit Economics.

I just had a question regarding the trading business and you know, Golar Commodities.

To what extent do you think there would be cargoes available say from Qatar where the pipe dream of being able to pull in and buy $3.00 gas at Qatar and deliver it to $8.00 at the UK and keep some or all of the difference?

To what degree do you think that could develop this winter?

It's somewhat difficult to say how it will exactly deliver this winter.

[As far as the authorities] of the city a year or two years ago, on the start of trading cargoes straightaway, and there are opportunities in this market for -- I think as far as I remember, I think they trade at something like [$15.00] over the last 12 months or something like that.

Okay and what type of pricing do you think you'd pay based on what you have seen in recent times?

How cheap could supply be available on a spot basis?

I mean, if you look at the volatility of LNG prices, it's impossible to say.

Are you talking about December or whatever?

This is impossible to say.

I mean, it's so volatile this LNG price, and that's the whole thing (inaudible).

So last year, I think it was down to $2.50 and then it's gone up to $4.30 now and it's difficult to say.

I guess last part of the same question, what type of spread -- will there be environments or do you think you will be able to find environments where you could make potentially $1.00 or several dollars on an arbitrage basis?

We are (inaudible) because we believe there are margins here to be made; some cargoes we can make $0.05.

Some other cargoes, we can make -- it depends on the market and opportunities and how we do this business.

As I said, there are ways of doing storage which might increase this type of margins.

But again, this depends on the market and it's very volatile.

Eric (inaudible) Arctic Securities.

Just one -- actually a few questions.

In terms of the FSRUs and your progress on your conversion candidates, when can we expect to hear more formal on sort of what kind of timing you are looking at here?

You already work with the Hilli (inaudible) license.

Will we see that in operation in 2011 or are you still sort of thinking about that?

We don't work on a (inaudible) are working on a number of potential projects.

We are working on a tender in Indonesia, as I said.

We have been working on a number of tenders.

[To be honest] in regards to these tenders, seems to be a more offshore (inaudible) specifications which it means that if this industry -- it changed this industry compared to the projects we have done from before.

But I think generally based on what we see around the world, that there are real interest in these things, and I think they will be placed two to three, four re-gas projects over the next 12 months.

Following up on that, you have a fairly old fleet of vessels that you are considering as your primary conversion candidates.

Any comments on that, when you think about the other players looking to convert the younger vessels, and then your competitive stance in that perspective?

There are a few things.

It's a good question because in the recent tenders, they ask for younger candidates.

Of course that has a cost effect because (inaudible) $350 million in value of an old vessel and a new vessel.

So of course that adds -- it usually adds double the price, just before -- based on the vessel price.

But a lot of the new vessels, they are (inaudible) tankers and they are not really fit for this type of work because you can't really run with [slack tanks].

This becomes very technical, but most tankers, they can last for 500 years, and there are no restrictions to partial loading.

So I think these vessels are actually more fit for this type of work than a modern vessel unless they are reinforced.

Thank you.

A final question.

You said that it seems more like FSRU projects are becoming offshore projects.

Do you see any synergies with other companies involved in that kind of business going forward?

We are working between a lot of different companies, as I also said, a lot of customers ask for infrastructure projects and we are trying to find a partner on infrastructure.

You are familiar with building objectives and harbors and so forth.

But we would like to try to move this industry away from offshore, because we know that it's just not cost effective.

It's not good for safety or anything.

It's just adds cost and the big winners in the offshore industry is engineering companies, not contractors (inaudible)

(Operator Instructions) Petter Narvestad, Fondsfinans.

Can you give us some flavor on CapEx going forward?

You have had $30 million remaining on the Freeze going into the second quarter, but when that fails, what are we going to see both on the Golar LNG level and Golar Energy level?

Well the Golar LNG level, there isn't any, other than obviously the cyclical drop documented in CapEx.

At Golar Energy level, it's purely project contract award driven.

So if we win some contracts, then we will have CapEx.

But we don't have any committed CapEx [once the Golar Freeze is gone on LNG either].

No money going out to the Hilli as it is now?

No, not actually.

As somebody mentioned earlier, we've ordered a few long lead items but it's relatively [small beer].

What's the maintenance CapEx levels, if you look at the five long-term assets and then the spot assets, if you could split that up on an annual basis?

Well, a modern ship, sort of four spot ships dried up costs of the order of $3 million to $3.5 million currently as they're fairly new five-year cycles.

So what's that?

About $4 million a year?

And then in the Golar LNG Ltd.

fleet, you have (inaudible) so you have the three FSRUs dry dock every five years, which will be in the order of probably $6 million, $5 million, $6 million and then you have the two LNG carriers which will be slightly similar.

One Golar Mazo is now in the three-year cycle.

So that's about $2.5 million to $3 million every three years and the Princess is $3.5 million every five years.

That equates to what?

About probably about $4 million to $5 million a year as well.

Fairly low levels then, basically.

Yes.

(inaudible) capital (inaudible)

Ole Stenhagen, SEB.

When you start off this trading operation, sort of just after things changed with Australia, because you were sort of coming into position where you had LNG potentially from Gladston.

You then had the transporting vessels, and then you are developing a fleet of FSRUs in many locations.

It sort of looked like you were trying to set up the chain.

Now instead or now maybe you have done it anyway.

But now you are gaining a trading operation.

Are there guys who are asking you to [tend the FSRU] projects asking you to provide the LNG as well, or do they have their own sources for that?

I don't think the -- really the Gladstone thing and the trading thing are particularly linked.

As you said, the trading opportunity would have -- I think we would have done anyway.

Obviously having an LNG sort of term position would have been good.

And I think in the longer term, we would try and seek an alternative to that, assuming of course nothing does eventually come of Gladstone.

And then on the customer side, as Oscar said earlier, we're not -- we certainly haven't gone out and done this because our customers are saying look, we need this as well as your FSRU.

But it certainly is something people do talk about.

So there's obvious complementary overlap between the two business areas.

What kind of extra, let's call them what they are, delays, does the fact that many customers look at this as an offshore operation, introducing to the tendering process and into the construction and eventual completion of these projects?

Is there a comparison?

Are you thinking in terms of one year to a year and a half if it's a shipping based thing and longer if it's offshore or how do you think about that?

You want to try that one, Oscar?

I didn't really get your question.

Well I mean, these projects take time anyway and you're guiding that things take time in the report.

And I'm asking -- and then you say that people are looking at this in an offshore context with the technologies etc.

we see there, and I'm asking, does that make the process from start of tender to possible startup of project even longer?

I think that you are right in many ways, that that can happen.

But on the other hand, these customers, they also want these vessels tomorrow.

So they shoot themselves in the foot in many ways.

And that's what we are trying to do, to really force them into a more shipping solution.

So I mean, I was around in the Far East here last week and everybody wanted the vessels in operation from 12 months from now.

So it's difficult to say.

Problem -- some of the challenges here is of course this is very often very political, LNG import (technical difficulty) so it doesn't make it easier.

But there are opportunities which can be very, very fast tracked projects and we would generally like to try to avoid tender processes (multiple speakers)

A final question, why is there no mention of floating liquifaction in this report?

You have mentioned that so many times before.

I think we have mentioned it before.

Last time I said (inaudible) done here is -- we've done a concept study to do a lean, a very lean (inaudible) re-gas where we do just pipe gas, not a full-fledged FLNG.

We are focusing on short-term cash flow, because generally these FLNG cash flow may be five to six years from your 8-K filing.

So that's the reason maybe we have that as a quite low priority for a moment.

Thank you.

It appears we have no further questions at this time, sir.

Well thank you to everybody for joining us today.

Sorry for my interludes with the fire alarm, and we look forward to talking to you all again next quarter.

Thank you.

Bye bye.

Thank you.

That will conclude today's conference call.

Thank you for your participation, ladies and gentlemen, you may now disconnect.