LNG

Belgian shipping company Exmar, owner of the “Tango FLNG” barge from Argentina now up for re-charter, reported increased third-quarter consolidated earnings.

Exmar, based in the port of Antwerp, said its operating result came to $22 million in the three months to September compared with $21M in the same quarter of 2019.

The company’s gross quarterly earnings jumped to $58.8M from $27.4M in the prior-year quarter.

Exmar is led by Chief Executive Nicolas Saverys and also continues to manage 10 LNG floating storage and regasification units, though is not directly involved in regasification projects with former partner Excelerate Energy of the US.

The company said that its Midsize Gas Carriers business continued on its upward trend while pressurized-ships spot market was suffering due to low refinery activity.

Exmar announced in October that it had reached a settlement deal with Argentine oil and gas company YPF SA over the dispute under the “Tango FLNG” charter agreement that blew up in June 2020. The LNG production barge was now available for re-hire.

Under the accord, YPF has agreed to pay Exmar $150M in consideration of the early termination of their charter agreement and the withdrawal of arbitration proceedings.

The Belgian company's FLNG barge has production capacity of around 500,000 tonnes per annum. It was first deployed at the Bahia Blanca port in Argentina.

In addition to owning an LNG FSRU and its FLNG interests, Exmar owns and manages a fleet of almost 40 other vessels including liquefied petroleum gas (LPG) carriers.

The FLNG vessel, bullt at the Chinese Wison shipyard in Nantong, China, formally started its operations in Argentina in mid-2019 and a 10-year charter term began in September 2019.

Exmar said the “Tango FLNG” had delivered five shipments, or 624,000 cubic metres of LNG to date with an availability of 99 percent.

In its latest earnings, Exmar added that its infrastructure division posted an operating result of $4.1 compared with $700,000 in the same three months of last year.

The earnings had been “negatively affected” by the recognition of a provision of $16.4M on uncollected revenues from YPF for the “ Tango FLNG” barge.

However, the settlement deal will be reflected in fourth-quarter earnings for October to be published in 2021.

The loan agreement with Bank of China and Deutsche Bank with respect to the “Tango FLNG” financing foresees a replenishment of the Debt Service Reserve Account for an amount up to $40M, of which $22M has already been paid.

“The modalities for the payment of the balance are still under discussions,” added Exmar.

The company said that the FLNG barge was now being prepared for demobilization. “Commercial leads for new employment are actively being pursued,” stated Exmar.

A second Exmar vessel, a floating storage and regasfication unit, continues serving under a charter party with global commodities firm Gunvor, even though it is not yet deployed.

“Arbitration with respect to a dispute under the contract is ongoing without financial impact,” Exmar explained.

Exmar, the Belgian shipping line, has reached a settlement agreement with Argentine oil and gas company YPF SA over the dispute under the “Tango FLNG” charter agreements that blew up in June 2020 and the production barge is now available for hire.

The Belgian company said a settlement amount of US$150 million will be paid by YPF to Exmar in consideration of the early termination of their charter agreements and the withdrawing of arbitration proceedings.

“A first instalment of $22m was remitted on October 19. The balance of $128M is payable in 18 monthly instalments backed by adequate financial security,” said Exmar.

The loan agreement with Bank of China and Deutsche Bank with respect to the “Tango FLNG” foresees a replenishment of the Debt Service Reserve Account for an amount up to $40M.

“The specific modalities are currently being discussed with the lenders,” said Exmar.

The Belgian company stated that the FLNG barge with production capacity of around 500,000 tonnes per annum was now available for other projects.

“The FLNG’s immediate availability, proven track record and operational experience are the right elements to rapidly unlock new markets for gas exports,” said Exmar.

“Commercial leads for new employment are being actively pursued,” it added.

In addition to owning an LNG FSRU and its FLNG management interests, Exmar owns and manages a fleet of almost 40 other vessels including liquefied petroleum gas (LPG) carriers.

The “Tango FLNG” was first deployed at Bahai Blanca port in Argentina.

The vessel was built at the Chinese Wison shipyard in Nantong and delivered to Exmar in 2017. It had initially been destined for a project in Colombia in South America that was cancelled.

The vessel formally started its operations in Argentina in mid-2019 and a 10-year charter term began in September 2019.

Exmar said the “Tango FLNG” had delivered five shipments, or 624,000 cubic metres of LNG to date with an availability of 99 percent.

The winter season then started in the Southern Hemisphere and liquefaction activities were stopped by YPF in May 2020.

Exmar first announced a YPF “force majeure” for the vessel on June 25, 2020.

YPF used pipeline natural gas to produce the LNG and export it, as a possible prelude to being a future LNG exporter from its huge onshore Vaca Meurta shale gas resources. 

Exmar is led by Chief Executive Nicolas Saverys and has suffered some financial difficulties for several years. However, it continues to manage 10 LNG FSRUs for former partner Excelerate Energy of the US, with whom it started many LNG import projects.

Exmar, the Belgian shipping and projects company with more than 40 vessels in its fleet and now mostly focused on the liquefied petroleum gas business and LNG shipment management, said the Bank of China had finally released financing for the “Tango FLNG” production barge deployed in Argentina while the vessel itself was earning income as it liquefied shale gas from the Vaca Meurta Basin.

Exmar, the Belgian shipping company with more than 40 vessels in its fleet now mostly focused on the liquefied petroleum gas business, said the outbreak of the coronavirus in China has caused further delays in the release by the Bank of China of $40 million under the “Tango FLNG” loan facility. 

Exmar, which has undergone financial troubles over the past couple of years, had previously said the China Export Credit Insurance Corp. had approved the release of around $40 million from a debt service reserve account under the “Tango FLNG” loan conditions.

The “Tango FLNG” vessel is chartered to Argentina and has exported three cargoes from the port of Bahia Blanca where it produces LNG from pipeline feed-gas.

The vessel was built at the Chinese Wison shipyard in Nantong and delivered to Exmar in 2017. It had initially been destined for a project in Colombia in South America that was cancelled.

Exmar said it was awaiting for the offices of the Chinese authorities to officially re-open and the tranche of money to be paid.

The vessel, chartered by Argentine energy company YPF, formally started its operations in June 2019 and the 10-year charter term began in September 2019.

The “Tango FLNG” production barge can produce around 500,000 tonnes per annum of LNG for domestic sale or export.

Exmar continues to manage 10 LNG floating storage and regasification units, though is not directly involved in regasification projects with former partner Excelerate Energy of the US.

Exmar added in its financial update that under the ongoing arbitration procedure on an FSRU barge with commodities group Gunvor, the financing of the asset could not be completed.

“Meanwhile Exmar obtained a further extension of its bridge loans until the end of February and of certain other capital expenditure until mid-March,” explained the Antwerp-based company.

Exmar is still caught up in a legal dispute with Gunvor over an FSRU barge that was also delivered from the Wison Nantong shipyard in China in 2017.

The Exmar barge with 25,000 cubic metres capacity was the subject of a 10-year Charter to Gunvor signed in October 2018.

Gunvor had been expecting to deploy the barge in Bangladesh. Then the Asian nation cancelled planned small-scale projects to concentrate on a larger venture.

Exmar has also made executive changes in January 2020 as it tries to improve finances after several setbacks to meet the challenges of the year ahead.

Among the changes, it has named Francis Mottrie in the new position of Deputy Chief Executive to work along Nicolas Saverys, the Group CEO.

Exmar, the Belgian shipping company with more than 40 vessels in its fleet focused on the liquefied petroleum gas business, narrowed its third-quarter net losses to $16.3 million as its drawback from LNG activities has been hampered by an arbitration case brought by commodities firm Gunvor, offset by a successful LNG production vessel charter to Argentina.

A US government report outlines a rise in Argentina’s domestic natural gas production noted over the past three years, largely because of increasing production from the Neuquén Basin’s Vaca Muerta Shale and tight-gas play, while the nation has also started LNG exports.

“As production has grown, Argentina has resumed exporting natural gas by pipeline to neighboring Chile and Brazil and has started exporting liquefied natural gas,” said the report from the US Energy Information Administration.

Production from Vaca Muerta Shale surpassed 1.0 billion cubic feet per day (Bcf/d) in December 2018 and Argentina’s first LNG export cargo was shipped on June 6 from the offshore Tango floating liquefaction unit, according to the report.

“The growth in Argentina’s shale and tight gas production has partially offset declines in its natural gas production from mature fields,” said the EIA.

However, output from Vaca Muerta now accounts for about 23 percent of Argentina’s total gross natural gas production.

“The Vaca Muerta shale formation has technically recoverable resources of 308 trillion cubic feet of natural gas and 16 billion barrels of oil and condensate within 8.6 million acres, and it is geologically comparable to the Eagle Ford shale play in southern Texas,” stated the EIA.

“Only 4 percent of Vaca Muerta’s acreage has entered the development phase so far,” the report added.

“Argentina’s domestic natural gas production exceeds consumption during warmer months, from October through April, though production is insufficient to meet demand during colder months, May through September, which requires Argentina to import natural gas by both pipeline and as LNG,” explained the EIA.

“Because Argentina doesn’t have geologically suitable formations to serve as large-scale natural gas storage facilities, natural gas producers have to shut in surplus production to accommodate seasonal consumption patterns,” said the report.

“Argentina is conducting feasibility studies to identify potential natural gas storage sites,” it added.

From 1990 through 2007, Argentina was a net exporter of natural gas. Since then, Argentina has been importing more natural gas both by pipeline (mainly from Bolivia) and as LNG.

Argentina imports LNG using a floating storage and regasification vessel (FSRU) moored at the Escobar port near Buenos Aires.

In the last two years, with the growth in domestic production, Argentina has been importing LNG only during cooler months, March through October.

“Argentina will likely continue importing LNG during cooler months until additional pipeline infrastructure is built to deliver growing shale production to major demand centers,” said the US report.

“Argentina’s seasonal demand patterns, the opposite of countries in the Northern Hemisphere, allows Argentina to export LNG during months when major consuming countries in Asia are importing more LNG,” it added.

Natural gas from Vaca Muerta is transported by an existing pipeline network to the port of Bahía Blanca, where it is liquefied at Tango FLNG, a floating production barge chartered from Belgian shipping company Exmar.

“These pipelines were previously used to transport imported LNG from an FSRU moored offshore at Bahía Blanca,” said the EIA.

“Tango FLNG has an LNG production capacity of 500,000 metric tons (0.07 Bcf/d) and is expected to produce up to eight LNG-export cargoes per year,” it added.

“Future growth in LNG exports will require additional investments in onshore liquefaction facilities and pipeline infrastructure or the use of additional floating LNG-production vessels,” stated the US report.

Exmar, the Belgian fleet owner with LNG assets such as the “Tango FLNG” production hull operating at Bahia Blanca in Argentina, said it had repaid a senior unsecured bond as it reorganised some of its finances and cut costs to underpin its financial future.

Exmar said in an update on its finances that it had repaid the unsecured bond funded partially with a new unsecured two-year bond of 650 million Norwegian crowns ($75 million) and partly with available resources.

The company, led by Chief Executive Nicolas Saverys, currently manages a fleet of 10 LNG carriers and FSRUs and owns two FLNG barges. The company, like many others, has suffered over the last few years from the shipping industry downturn.

Exmar also operates in the liquefied petroleum gas market, where it owns or operates around 30 vessels. It has been expanding in the LPG sector while consolidating its LNG interests.

Antwerp-based Exmar said in the financial update that it organized the payments on the Floating Storage and Regasification Unit (FSRU) barge in the second quarter of 2019.

The financing is approved by the credit committee of China State Shipbuilding Corporation (CSSC), where the vessel was built, but due to a delay in the finance documentation with CSSC, the financing is not yet concluded.

“The completion of the documentation is expected in the course of the third quarter of 2019,” said Exmar.

The company also explained that further to the successful performance acceptance tests of the “Tango FLNG” in June 2019, Exmar met all conditions for the partial release of the debt service reserve amounts for the repayment of the $200M loan with Bank of China and Deutsche Bank ($40M in a first phase).

“This repayment is subject to the approval of Sinosure (export credit insurer), the latter taking more time than previously communicated,” it explained.

“Exmar will do its utmost to expedite this repayment, expected to occur in the course of the third quarter of 2019,” stated the Belgian company.

The “Tango FLNG” plant is chartered by Argentina energy company YPF under a 10-year agreement. The vessel was built at the Chinese Wison shipyard in Nantong and delivered to Exmar in 2017.

The vessel is the former floating liquefaction unit, “Caribbean FLNG”, constructed for a cancelled venture in the South American state of Colombia and renamed before being sent to Argentina.

Pending the settlement of both the Chinese credit issues, Exmar said it acquired a bridging loan for $30M to temporarily increase its liquidity.

Additionally, Exmar has signed an agreement with Compagnie Maritime Belge (CMB) for the sale of 50 percent of its shares in Reslea, owner of the office buildings in Antwerp.

Exmar will realize a capital gain of about $19M and therefore reinforce its liquidity position.

The company also gave the instruction to pay the first instalment for the construction of two Very Large Gas Carriers (VLGCs) in accordance with the shipbuilding contract with Jiangnan Shipyard in China.

“Both vessels are under construction in Shanghai and will serve under a firm contract of five years with Equinor after delivery in 2021,” said Exmar.

“Exmar expects and believes that as per December 2019 it is foreseen that all (financial) covenants will be met,” it added.

Exmar posted an annual pre-tax loss of $14.2 million compared with a profit of $29.3M the previous year, though said it was confident of a sound financial future.

Exmar, the Belgian shipping line with floating liquefied natural gas interests, including the “Tango FLNG” production hull now deployed at the Argentine port of Bahia Blanca, has recorded a pre-tax loss as its business is restructured.