LNG

Southern Cone gas and power players comprising the nations of Argentina, Brazil, Bolivia and Chile have plans to invest around $46 billion in natural gas production and $94Bln in new power supply through 2033.

New Fortress Energy, the New York-based developer of liquefied natural gas import and export projects, could begin production as early as October 2023 from a floating FLNG plant offshore the Mexican port of Altamira in the Gulf of Mexico.

NFE is on course to start LNG production and export operations in the weeks ahead, the first ever from Mexico, at a facility with capacity of 1.4 million tonnes per annum.

NFE’s “Fast LNG” pairs modular, midsize liquefaction technology with jack-up rigs to enable lower-cost and faster deployment schedules.

The US company and Mexico's state-owned power utility, the Comisión Federal de Electricidad (CFE), have set up the LNG hub in Altamira in the GoM to convert Mexican natural gas into LNG for export.

Installations

The US company expects to complete and install the two remaining parts of the FLNG project this month and to immediately introduce gas and with a first cargo sold in October, according to a company presentation.

Each of NFE’s three parts of the first “Fast LNG” project have been completed at the Kiewit Offshore Services yard in Ingleside in Texas.

The company said that the first “FLNG 1” liquefaction operating facility is being deployed in Mexican waters at a cost of just $1.3 billion, far below the cost of other proposed projects.

NFE has yet to formally confirm when exactly the Altamira FLNG production plant will come on stream.

The US firm received an export permit in June 2023 for the Altamira ‘Fast LNG’ facility from Mexico’s Ministry of Energy.

Under the permit, NFE is authorised to export up to 7.8 million tonnes of LNG through April 2028, providing ample capacity to support the operations of the planned 1.4 MTPA facility through the permitted period. 

Final piece of puzzle

“This permit is the final piece to the puzzle for launching our first ‘Fast LNG’ in Altamira,” Wes Edens, NFE Chairman and Chief Executive has said.

NFE is also completing two other LNG projects in the months ahead relating to LNG imports in the South American nation of Brazil.

The Barcarena LNG import terminal in the state of Pará is due for completion in December 2023 at a cost of $700M and in January 2024 a second Brazilian import terminal will open in Santa Catarina state in the south of Brazil.

Each of the Brazilian terminals will have import capacity of 3 MTPA to support local power projects.

NFE has said that the “Fast LNG” project at Altamira as well as two Brazilian import terminals and a power venture in Puerto Rico are part of a revenue spend of  $3.2Bln on infrastructure that will soon be “revenue producing” operations for the company.

Höegh LNG Holdings, the owner of 10 floating storage and regasification units and two conventional LNG carrier, has completed the acquisition of the LNG carrier “Golar Seal”.

The company purchased the 2013-built “Golar Seal” from Cool Co., the LNG shipping joint venture led by Eastern Pacific Shipping.

Höegh LNG paid $184.3M for the vessel with 160,000 cubic metres of capacity.

Hamilton, Bermuda-based, Höegh also assumed all costs associated with the vessel's scheduled dry-docking.

Höegh said that the “Golar Seal” would also be renamed the “Höegh Gandria”.

Höegh last month reported net losses for the fourth quarter and the year during a busy period as three vessels were prepared for floating storage and regasification unit (FSRU) operations in Germany and Brazil.

Höegh still posted increased revenues during the last three months of 2022 amounting to $106.06M, up from $94.66M in the same quarter of 2021. Full-year revenues rose to $380.8M from $351.8M in 2021.

FSRU market

The company increased vessel operating expenses primarily related to repositioning of three vessels to make them ready for FSRU operations.

All three vessels completed their FSRU operational preparations at shipyards during the fourth quarter and two 10-year time charter contracts with the German Federal Government were signed in December and January respectively.

The company’s FSRUs “Höegh Esperanza” and “Höegh Gannet” were allocated to contracts and deployed in Germany at the North Sea port of Wilhelmshaven and at Brunsbüttel on the Elbe River north of Hamburg.

The third vessel, “Höegh Giant”, left the yard in November and was operating in the LNG carrier market on an interim charter before it was scheduled to go to Brazil in the second quarter of 2023.

Höegh signed a 10-year charter agreement with a Brazilian joint venture comprising São Paulo Regas Company and Comgás, Brazil’s largest gas distributor.

Höegh added in its earnings statement that its business development team was in “active dialogue” with several potential new projects looking for FSRU capacity which could provide growth opportunities for the group in the future.

New Fortress Energy Inc., the US LNG-for-power company, has sold its stake in the Porto de Sergipe Power Plant in northeast Brazil along with its joint venture partner for around $1.3 billion.

Belgian company Fluxys, whose assets include the Zeebrugge LNG import terminal and a stake in Dunkirk LNG in France as well as the Trans-Adriatic Pipeline, has completed its purchase of minority stake in a gas system operator in Brazil.

The deal is for part of the Brazilian utility, Transportadora Brasileira Gasoduto Bolívia-Brasil (TBG), which is the owner and operator of a 2,600-kilometres pipeline system in the southern part of the South American country linking with neighbour Bolivia.

Fluxys said the completion of the equity transfer was made by its new partner in TBG, the US fund, EIG Global Energy Partners.

“The agreement with EIG is a solid fit with Fluxys’ strategy to develop outside Europe,” said the Belgium-based company.

“The work done by Fluxys and EIG has provided a sound basis for their continued cooperation,” it added.

“Fluxys looks forward to joining the Board of TBG in its efforts to move the company ahead in its development and has set up a branch in Rio de Janeiro for managing its partnership in TBG,” Fluxys stated.

The Fluxys infrastructure group employs 1,200 people in Europe in its growing gas transmission and storage and LNG terminal businesses.

Its associated companies across Europe operate 9,000km of pipelines and its assets import 29 billion cubic metres of regasified LNG.

It is also a shareholder in the Trans-Adriatic Pipeline, the 878-kilometres transportation system bringing Caspian natural gas from Azerbaijan to Greece and Albania, and via the Adriatic Sea to Italy.

The Belgian grid operator said the partnership with TBG was an important step in the roll-out of the Fluxys overseas growth strategy.

Brazilian state-controlled energy company Petroleo Brasileiro SA said it had pre-qualified nine bidders, including European-based majors Royal Dutch Shell, BP of the UK and Total of France, for the long-term lease of one of its liquefied natural gas import terminals in the northeast of the country.

The bidding is for a lease on the Bahia LNG terminal site and its associated pipeline in the northeast state of Bahia as well as access to the Brazilian gas market network.

The move by the company, known as Petrobras, is in line with an agreement made with the nation’s antitrust regulator in July 2019 to open up the Brazilian natural gas market to more competition.

“The lease bidding process is in line with the strategy of improving and building a favourable environment for new investors to enter the natural gas sector, while improving capital allocation,” Petrobras said in a statement.

The facility is located at Baía de Todos os Santos in the port city of Salvador and has regasification capacity of 14 million cubic metres per day of natural gas.

Analysts say there was still tremendous scope for increasing natural gas use in Brazil for the energy transition.

Currently natural gas is in third place in the country’s use of primary energy behind oil (46 percent) and hydropower (29 percent).

These three are followed by a growing renewables sector made up mostly of wind and bio-fuels at 8 percent. Coal use is reducing annually and is now down to about 5 percent.

Petrobras did not issue a schedule for the next stages of the bidding process for the Salvador LNG terminal.

Other companies included in the short list to lease the terminal are Spanish major Repsol, floating import terminal pioneer, Excelerate Energy of the US, and Golar Power, a joint venture project of Golar LNG and US equity fund, Stonepeak Infrastructure Partners.

Spanish utility Naturgy also pre-qualified along with the local Brazilian utilities, Bahiagas and Compass Gas and Energy.

Any final lease agreement will not include the 173,400 cubic metres capacity floating storage and regasification unit “Excelerate Experience”, which is currently deployed at Salvador.

However, other infrastructure included in any deal will be the 45-kilometre associated pipeline. It originates at the LNG terminal landfall and has two gas exit points at Sao Francisco do Conde and Sao Sebastiao do Passe.

The Bahia terminal in Salvador is one of three controlled by Petrobras in Brazil.

The two others at Pecem in the northeast state of Ceara and at Guanabara in the state of Rio de Janeiro, which has been idle since 2018.

While Brazil’s three terminals have been significantly under-utilized, Petrobras and the government are just now making efforts to allow third-party access.

In March 2020, the 170,000 cubic metres capacity FSRU “Golar Nanook” became the first independent terminal to begin operating in Brazil for Golar Power in a private project.

The FSRU is deployed in the small northeast Brazilian state of Sergipe as part of gas-fired power plant venture that will enable Brazil to increase its energy security and natural gas use while continuing to expand its development of renewables.

Brazilian energy regulators said a total of 17 oil and gas companies are registered to take part in one of the most lucrative auctions ever for licences set for November 7 and with prospects of raising US$50 billion for the South American nation from the blocks offered for oil fields with associated gas.