LNG

New Fortress Energy, the US integrated LNG and power company that owns, operates or provides natural gas to 30 facilities in five countries has been awarded a new gas supply contract in Puerto Rico.

NFE said the Puerto Rico gas contract more than doubles the volumes of gas it currently provides to power plants in the US territory in the Caribbean.

The New York-based company additionally sold two operating power plants to the Puerto Rico Electric Power Authority (PREPA).

NFE explained that it sold the emergency power plants it constructed on behalf of the US Army Corps of Engineers in San Juan and Palo Seco in Puerto Rico to PREPA for $373 million in cash, subject to certain items and conditions.

Power security

“These plants were developed by the company in 2023 in rapid response to a competitive bid by the US Army Corps of Engineers to provide emergency power in order to stabilize the power grid in Puerto Rico,” explained NFE.

“They have become a cornerstone of Puerto Rico's energy portfolio, delivering critical baseload power to stabilize the grid in the aftermath of recent natural disasters, and as contemplated, their ownership has been transferred to PREPA,” NFE added.

Following a competitive bid process, NFE was awarded and has entered into a new island-wide gas supply contract with PREPA, ensuring continued gas supply to these power plants for up to four years.

“The expanded volumes under the contract will enable conversion of other plants on the island from diesel to gas, providing lower cost, cleaner energy to Puerto Rico,” NFE stated.

As a result of the early termination of the contracts that have governed the construction, operations and associated costs of the two power plants, NFE said that it expected to negotiate a mutually beneficial settlement of all outstanding obligations in the near future.

“We entered the Puerto Rico market in 2017 based on the island’s emergency need for natural gas and power,” said Wes Edens, Chairman and Chief Executive of NFE.

“The transactions mark a significant milestone in our continued commitment to Puerto Rico's energy security and cost reduction efforts while significantly increasing our business in the region,” Edens added.

LNG projects

In its most recently earnings, NFE reported net income for 2023 of $547.88M, an almost three-fold increase from the $194.48M achieved in 2022.

After the end of the financial year NFE noted that in February 2024 it completed the Brazilian Barcarena and Santa Catarina LNG import terminals and placed them into service.

In NFE’s “Fast LNG” operation whereby it produces LNG from feed gas, it placed into service its first unit offshore the Gulf of Mexico and is now expecting first LNG in March and the first cargo in April 2024.

Venture Global LNG Inc., the US liquefied natural gas developer involved in a dispute with many customers regarding the non-delivery of post-commissioning cargoes from the Calcasieu Pass project in Louisiana, plans to acquire nine LNG carriers to expand its worldwide sales especially of spot shipments.

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.