LNG

NextDecade Corp., the company developing the Rio Grande LNG export plant on the north shore of the Brownsville Ship Channel in South Texas, has given an update on strategic activities through the early second quarter of 2024.

Sept 12 (LNGJ) - Santos, the operator of the Gladstone LNG plant in Queensland and the Darwin facility in the Northern Territory as well as being a significant shareholder in Papua New Guinea LNG, has successfully conducted a debt offering and priced a US$850 million senior unsecured fixed rate bond transaction in US dollars. The bonds have been priced at a fixed coupon of 6.875 percent for a period of 10 years, maturing in September 2033.

   “This demonstrates continuing strong support from the capital markets and ensures our balance sheet is well positioned to deliver on our strategy,” said Santos Chief Executive Kevin Gallagher. The settlement of the bonds was expected to occur in New York on September 19 and was subject to customary closing conditions.

MET Group, one of the fastest growing European energy companies active in international natural gas, LNG and power markets and based in Switzerland, has signed a €1.23 billion ($1.33Bln) syndicated multicurrency secured revolving borrowing facility that was oversubscribed.

New Fortress Energy Inc, the expanding LNG terminals, production, shipping and power assets owner, has entered a joint venture valued at $2 billion with New York-based asset management firm Apollo relating to floating storage and regasification units (FSRUs) in the LNG sector and opening up a long-term financing arrangement.

New Fortress signed the deal to sell LNG infrastructure vessels it owns to the newly formed joint company whereby 80 percent would be held by Apollo funds and 20 percent by NFE.

“This transaction will create a global marine infrastructure platform underpinned by long-term contracts, benefitting from NFE's LNG downstream operations and development activities, as well as Apollo's leading investment and maritime experience,” said a joint statement.

NFE’s existing fleet came from its acquisition in 2021 of Golar LNG Partners and its assorted FSRUs and LNG carriers.

“The platform provides critical infrastructure for the delivery, storage, and regasification of LNG to power countries around the world, which can reduce their reliance on oil and coal to lower carbon emissions,” it added.

The 11-vessel portfolio of the venture consists of six FSRUs, two conventional LNG carriers and three floating storage units (FSUs).

Charters

“The total implied enterprise value of the transaction is about $2Bln and NFE will receive around $1.1Bln in proceeds after accounting for NFE's share of the venture and paydown of existing debt,” the companies explained.

As part of the transaction, NFE has agreed to charter 10 of the 11 of the vessels from the Apollo-controlled venture for a period of up to 20 years commencing either upon close of the transaction or upon expiration of the existing third-party charter agreements of the vessels.

The venture will also seek “growth opportunities” in support of both NFE and third parties to support the energy transition and bolster energy security globally.

Apollo is a high-growth, global alternative asset management business focusing on select investment strategies.

“Together with Apollo, we are creating a leading LNG marine infrastructure platform to help accelerate the energy transition while freeing up capital to continue to invest into our ‘Fast LNG’ and downstream LNG projects worldwide,” declared Wes Edens. Chairman and Chief Executive of NFE.

“We are pleased to be partnering with Apollo in creating a maritime infrastructure company that will help support NFE's growing LNG infrastructure needs going forward,” he added.

Apollo Partner Brad Fierstein said he was pleased to help further the initiatives of NFE in the LNG business through long-term investment.

“This is a high-quality portfolio that increases energy security around the world, accelerates decarbonization efforts, and facilitates LNG use which is cleaner and more affordable than diesel,” stated Fierstein.

NFE and Apollo said they expected to transaction to be finalised in the third quarter of 2022.

“Transaction proceeds are expected to be utilized to fund NFE's FLNG projects. as well as for ongoing downstream infrastructure and general corporate purposes,” the statement added.

Pemex deal

NFE recently signed an agreement with Mexico’s national energy company Petróleos Mexicanos (Pemex) to form a strategic partnership including a floating LNG project in the Gulf of Mexico.

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

The US company will produce the LNG using its own “Fast LNG” design offshore.

NFE’s “Fast LNG” pairs modular, midsize liquefaction technology with jack-up rigs or similar floating infrastructure to enable a much lower cost and faster deployment schedule than floating liquefaction vessels.

The US company is additionally involved in other FLNG ventures, including one offshore the US Gulf state of Louisiana and another offshore the Republic of Congo in West Africa.

NFE is also advancing LNG-for-power projects in nations like Mexico, Nicaragua and Brazil as well as in the Caribbean and in Sri Lanka in Asia. 

Tellurian Inc., the developer of the Driftwood plant in Calcasieu Parish in Louisiana, said it would begin construction work in April on its large-scale liquefaction and export plant whether or not a final investment decision has been taken and all project financing is in place.

Executive Chairman Charif Souki outlined his views in a video commentary covering the Phase 1 financing of the venture near Lake Charles with permits to produce 27.6 million tonnes per annum of LNG.

The Driftwood project proposes to construct 20 processing Trains, each with 1.38MTPA of capacity, and built as five blocks of four Trains to reach the maximum planned capacity.

The Phase One development would include the first two of these blocks with 11 MTPA of output and two of three planned 235,000 cubic metres storage tanks and the first of three planned loading berths for LNG carriers.

“We will start construction in April in earnest. We have enough capital, or access to enough capital to make sure we get through the first year of construction,” stated Souki.

“People normally like to talk about FID or things like this, it doesn’t apply here,” added the Chairman.

“The second issue is, have we continued to completely de-risk the project? It’s not completed de-risked. What is really critical is putting the financing together,” he stated.

Bechtel ready

Souki pledged that Bechtel Inc., which has signed lump-sum, fixed-price contracts worth a total of $15.2 billion for engineering, procurement, and construction of Driftwood LNG, would be on the site in April.

Tellurian has 10-year offtake agreements in place totalling 9 MTPA with Shell North America and global commodities firms Vitol and Gunvor.

The Chairman said that he himself urged people to look at the Japan-Korea Marker price for LNG spot cargoes and the US benchmark Henry Hub because ‘they will determine everything” on the financing front.

“Well today, the commercial reason for doing the deal like this is very obvious. It started a year ago when winter prices around the world started becoming very, very high and it continued through recent weeks and is now so critical that President Biden is doing is best to find gas, for in particular for Europe, but also for the rest of the world and that is a major challenge,” said Souki in his commentary.

“We are now in a situation where we have signed non-disclosure agreements with 45 different financial institutions,” explained Souki.

“Should we rush to the process, no, because 45 different financial institutions would have a lot of different criteria and a lot of different things that we would look for in a final financing and it is critical to get it right for the value for the shareholders,” he added.

Proper financing

Souki explained that it was crucial to get the proper financing package in place.

“So we're not going to rush through that process. We are very comfortable starting the construction program without being completely sure that the financing would be put in place,” he added.

“But the board felt comfortable enough that we would get the financing in short order and possibly before we have to start construction but we will not rush that process. We will make sure that we get the right financing put in place,” continued Souki.

As regards the final financing Souki said he was looking for “two pieces of paper” and one would be a normal bank debt that is “kind of run of the mill” and he had a number of banks in place for this.

He added that he was also dealing with most of the large private infrastructure equity financing groups to have an equity-like instrument that will come in on top of the bank debt to finish building the financing.

Höegh LNG Partners, the US affiliate of Höegh LNG Holdings now partnered with the infrastructure unit of US investment bank Morgan Stanley, has reorganized part of its finances on a floating storage and regasification unit deployed in Indonesia and the subject of a dispute with the former charterer.

Global banks and insurance companies formed a long line to invest in Qatar Petroleum’s US$12.5 billion bonds to finance liquefied natural gas expansion in the Arab Gulf and the multi-tranche offerings could have been subscribed more than three times.

US credit ratings agency Moody’s Investors Service has affirmed the high credit rating of Qatar Petroleum as it embarks on liquefied natural gas expansions and the projects are expected to be completed on time.

BW Offshore, the Norway-listed floating production units provider for oil and gas, has been awarded an Australian contract worth US$4.6Bln by LNG operator Santos for the Barossa gas field to provide feed-gas for the Darwin liquefaction plant.

GasLog Ltd., the Monaco-based LNG carrier fleet owner with 19 vessels and with another 15 ships held by its US affiliate GasLog Partners, said it signed an export credit agency-backed debt financing facility of $1.05 billion with 12 international banks for its current newbuilding programme.