NFE joins Apollo - signs Mexican agreements

Thursday, 21 July 2022
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New Fortress Energy (NFE) is to sell 11 LNG infrastructure vessels to a newly formed joint venture (JV), involving investment vehicle Apollo.

This JV will be financed by funds managed by Apollo and NFE in a transaction valued at around $2 bill. It will be owned about 80% by Apollo funds and 20% by NFE.

Both companies claimed that this transaction will create a global marine infrastructure platform underpinned by long-term contracts, benefiting from NFE’s LNG downstream operations and development activities, as well as Apollo’s investment and maritime experience.

In addition to serving NFE’s projects globally, this platform also serves a diversified customer base of utilities and energy companies worldwide under third-party charters.

The 11-vessel portfolio consists of six FSRUs, two LNGCs and three FSUs.

NFE will receive around $1.1 bill in proceeds after accounting for its share of the JV and paydown of existing debt.

As part of the transaction, NFE has agreed to charter 10 out of the 11 vessels from the JV for up to 20 years commencing either upon close of the transaction or upon expiration of the vessels’ existing third-party charter agreements.

Subject to satisfying customary closing conditions, including receipt of certain regulatory approvals and third-party consents, closing of the transaction is expected to occur in the third quarter of this year.

Proceeds are expected to be used to fund NFE’s FLNG projects, as well as for ongoing downstream infrastructure and for general corporate purposes.

Mexican agreements

NFE has also signed two agreements with Mexican energy concerns.

The first was signed with Comisión Federal de Electricidad (CFE) and involves (i) expanding and extending NFE’s supply of natural gas to multiple CFE power generation facilities in Baja California Sur, (ii) selling NFE’s 135 MW La Paz power plant to CFE, and (iii) creating a new LNG hub off the coast of Altamira, Tamaulipas, with CFE supplying the feedgas to two NFE FLNG units using CFE’s existing pipeline capacity.

In July, 2021, NFE commenced commercial operations at the LNG regasification terminal in Pichilingue, La Paz, Baja California Sur.

NFE and CFE also plan to jointly create a new LNG hub off the coast of Altamira, Tamaulipas in which, NFE will deploy several FLNG units of 1.4 mill tonnes per annum each.

CFE will also share in the production and marketing of part of the LNG volumes from the new LNG hub.

The second contract signed was with Petróleos Mexicanos (Pemex) aimed at forming a long-term partnership.

This agreement involves the joint development of the Lakach deepwater natural gas field to enable Pemex to supply natural gas to Mexico’s onshore domestic market and for NFE to produce LNG for export to global markets.

In addition, NFE has awarded Fluor Corp a full notice-to-proceed (FNTP) contract for the engineering, procurement and fabrication management of the NFE Fast LNG 2 project.

This project is a nominal 1.4 mill tonnes per annum LNG gas treating and liquefaction plant to be placed on fixed offshore platforms.

“Fluor, in conjunction with key licensors and suppliers, provides NFE with an integrated modular mid-scale LNG export solution for these projects,” said Jim Breuer, Fluor’s Energy Solutions Group President. “The Fluor design and execution plan facilitates repeatable project models that can be used to replicate similar plants in the future.”

The Fast LNG 2 project is the second offshore modular mid-scale LNG plant that NFE has awarded to Fluor this year.

NFE awarded the Fast LNG 1 project to the company in the first quarter of this year and is a similar modular mid-scale design being installed on re-purposed drilling jack-up rigs. 

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