LNG

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.

Golar LNG Ltd, the operator of conventional carriers, floating import and export terminals and a power affiliate backed by its fleet of 27 ships, reported business progress while posting a first-quarter loss amid increased operating revenues.

Golar reported a net loss of $104.24 million for the first quarter compared with $41.74M of losses in the same three months of 2019.

However, total operating revenues were higher at $122.55M versus 114.28M in the year-ago quarter.

“Golar is pleased to report Q1 operating revenues and adjusted EBITDA of $76.2M, that were driven by a solid performance in FLNG, with 100 percent commercial uptime on ‘Hilli Episeyo’ (Cameroon FLNG exports), and strong seasonal results in Shipping,” said Iain Ross, Chief Executive of Golar LNG.

At the Golar Power affiliate, the 1.5 gigawatts Sergipe power plant in northeast Brazil reached its Commercial Operation Date acceptance which triggered earnings under the 25-year Power Purchase Agreement (PPA) and the associated FSRU “Golar Nanook” charter.

Golar LNG said that the first three small-scale customers have also now been formally signed up and LNG distribution operations are expected to start in 2021.

“This short time to cash flow and the very strong project return confirms the attractiveness of our small-scale business,” said the company.

“To date, a further 200 potential customers have signed letters of intent to pursue various small-scale opportunities with Golar Power, demonstrating the robust consumer appetite to reduce both energy costs and environmental footprints,” it added.

Among other highlights, Golar LNG said the power unit entered into a partnership with Petrobras Distribuidora S.A. to facilitate a nationwide rollout of small-scale LNG supply to Brazil's transportation and industrial sectors.

Golar Power also signed an accord with the Brazilian state government of Pernambuco to develop an LNG import terminal in the Port of Suape.

“We also expect to finalize arrangements for locating a Floating Storage Unit (FSU) at Suape over the course of the year,” said Golar.

The affiliate is additionally working with BR Distribuidora S.A to overlay its geographical coverage of LNG distribution onto BR Distribuidora’s 7,600 Brazilian fuel stations.

“This will optimize the roll-out of the necessary infrastructure to convert current diesel, heavy fuel oil and coal consumers to cleaner and cheaper LNG through the provision of a stable and secure LNG supply,” it said.

The floating LNG production from the “Hilli Episeyo” hull deployed offshore Cameroon in West Africa is heading for its 40th export cargo with 100 percent commercial uptime maintained.

Golar also noted that regarding the “FLNG Gimi” being built for production offshore Mauritania and Senegal in West Africa, the company received a “force majeure” claim from UK major BP in relation to a delay in the order of 12 months to the target connection date.

“We are in advanced and positive discussions with our main building contractor, Keppel Shipyard Limited, and with engineering topsides subcontractor, Black and Veatch, on a revised cost and time schedule for the ‘FLNG Gimi ‘conversion that can be implemented as a contingency in response to the 12-month delay claimed by BP on its Tortue project,” Golar explained.

In the LNG Shipping segment, Golar said it expected second-quarter time charters to be at around $40,000 per day, with utilization of at least 80 percent of the fleet based on fixtures to date and the prevailing spot market.

“The current chartering strategy to de-risk the business by targeting more fixed and floating coverage has been successful and we intend to fix more portfolio term-based deals to further de-risk shipping exposure and to hedge expected volatility,” said Golar LNG.

“Except for the ‘Golar Tundra’, scheduled to dry-dock during June, no other dry-docks are planned this year,” it added.

Golar Power, an affiliate of Golar LNG, has signed an accord with the northeast Brazilian state of Pernambuco to develop an LNG import terminal linked to a power venture, its second such project in the region. Golar will also launch small-scale regional LNG distribution.

The infrastructure for the facility will be constructed at Port of Suape on the Atlantic Coast of the state whose capital city is Recife.

Brazil’s latest LNG import terminal is scheduled to start up in the second half of 2020 in a gas-to-power project with Golar Power’s 50-50 joint venture partner, the US-based investment fund,  Stonepeak Infrastructure Partners.

“The project includes infrastructure for the supply of natural gas and LNG to generate electricity, in addition to meeting the demands of industries, commerce, LNG stations and households,” said Golar.

To this end, Golar said it would work in partnership with the local gas distribution company, Companhia Pernambucana de Gás Natural (Copergás) to bring natural gas to regions of the State that are not yet served by traditional pipeline networks. 

Golar and Stonepeak have already developed one gas-to-power in another  northeast Brazilian state of Sergipe where a Golar floating storage and regasification unit the “Golar Nanook” operates about 8.5 kilometres off the coast. 

The FSRU is connected by pipeline to a combined-cycle gas-fired power plant, the largest in Latin America, owned by Centrais Elétricas de Sergipe S.A. 

The Pernambuco project at the Port of Suape is expected to use the existing port infrastructure owned by the state government.

Pernambuco has a population of around 9.6 million people and the project is aimed at benefiting the economy of cities in the interior of the state.

“Natural gas will be delivered by road using LNG ISO-containers,” said Golar.

“Suape is already Brazil's largest hub for liquid bulk and gases and, now, it will be one of the main LNG distribution hubs in the Northeast, with full integration of sea and land transportation modes,” added the company,based in Bermuda with Norwegian origins.

The Golar Power terminal intends to use an existing LNG carrier, permanently docked at the port of Suape.

“The vessel will act as a supplier to truck mounted LNG ISO-containers. These vehicles will then distribute LNG to cities within a radius of up to 1,000 kilometres, “ Golar explained.

“Initial trucked volumes are estimated at 800 cubic metres of LNG per day, equivalent to approximately 480,000 cubic metres of natural gas per day,” it added.

“LNG will also be distributed from Suape to other states in Brazil, through cabotage using small-scale LNG carriers that will be supplied by trans-shipment and used to transport LNG to other ports in the region,” stated Golar.

Capital requirements for the project are expected to be funded from Golar Power’s internal resources and operating cash flow.

Golar added that the final development decision on the project remains dependent on regulatory approvals and the conclusion of commercial agreements.

Petrobras, the Brazilian state-run oil and natural gas company, has announced its largest natural gas discoveries in more than a decade in six deepwater wells in the Sergipe Basin offshore northeast Brazil.

Golar LNG Partners, the fleet owner listed on the Nasdaq global exchange, said the shipping market continued to improve in October and one of its carriers re-entered the spot market and completed multiple voyages.

Golar LNG, the fleet owner and project company, reported mixed fortunes for the floating production ventures it is involved in offshore four nations in West Africa, Equatorial Guinea, Cameroon, Senegal and Mauritania.

Golar LNG said its power venture subsidiary set up with Stonepeak Infrastructure Partners closed a financial agreement for a project in northeast Brazil involving a power plant and a liquefied natural gas import facility.

Golar LNG will provide a Floating Storage and Regasification Unit on a 25-year charter to supply a gas-fired electricity plant as part of a project in Sergipe, Brazil's smallest state located in the northeast of the country on the Atlantic coast.