LNG

Dec 11 (LNGJ) - Sri Lanka, the Asian island nation with unfulfilled plans for LNG imports and gas-fired power projects, has suffered a nationwide power outage over the weekend as the financial crisis continued to hinder fuel and food imports. Sri Lanka largely depends on hydro-electric power for power generation, while coal and oil can be used to cover the balance, though the financial crisis has hindered coal and oil imports.

   Sri Lanka declared bankruptcy last year with almost $85 billion in debts with more than half owed to foreign creditors. The government and the power industry said they were working to manage the situation. “We made a request to the government to allow the public sector, which has about 1.3 million employees, to work from home for the next two days so we can manage the fuel and power shortages better,” said a statement from Janaka Ratnayake, Chairman of the Public Utilities Commission of Sri Lanka.

New Fortress Energy Inc., the New York-based LNG-for-power project company with LNG production plans offshore the United States and Africa, said that the US Coast Guard in coordination with the Maritime Administration had affirmed the completeness of NFE’s deepwater port license application.

NFE said that both US security and regulatory bodies would proceed with the preparation of an environmental impact statement as part of the environmental review within the 356-day application process.

NFE’s application proposes the ownership, construction, operation of an offshore natural gas export deepwater port, known as New Fortress Energy Louisiana FLNG.

The project will be located in Federal waters about 16 nautical miles off the southeast coast of Grand Isle, Louisiana in a water depth of 30 metres.

NFE said that the deepwater port would allow for the export of about 145 billion cubic feet of natural gas per year, equivalent to 2.8 million tonnes per annum of LNG.

“This is a significant step forward for our effort to build the first ‘Fast LNG’ facility in the United States,” said Wes Edens, Chairman and Chief Executive of NFE.

The NFE “Fast LNG” design pairs modular, midsize liquefaction technology with jack-up rigs or similar floating infrastructure.

While analysts note that NFE equipment would enable a much lower cost and faster deployment schedule than floating liquefaction vessels, the industry has still to be persuaded that the NFE technology will pass safety and operational tests.

Equipment

Under the NFE plan, a permanently moored floating storage unit (FSU) would serve as an LNG storage facility alongside the floating liquefaction infrastructure, which can be deployed anywhere where there is abundant and stranded natural gas.

“With rapid deployment, this project can help address the energy crisis in Europe and support our efforts to reduce energy poverty by providing more affordable, reliable and cleaner fuel to our growing portfolio of customers,” explained CEO Edens

Subject to the receipt of all required permits and approvals, NFE targets beginning operations offshore Louisiana in the first quarter of 2023.

NFE and Italian energy company Eni are also advancing a “Fast LNG” project in the Republic of Congo in West Africa.

The first African floating LNG joint venture would have capacity of over 3 million tonnes per annum once fully operational.

NFE is additionally continuing to advance LNG-for-power projects in nations like Mexico, Nicaragua and Brazil as well as in the Caribbean and in Sri Lanka in Asia.

Golar LNG Ltd said it sold about one third of the 18.6 million New Fortress Energy Inc. shares received upon completion of the sale of Hygo Energy Transition to NFE in April 2021.

The sale is expected to raise net proceeds of approximately $250 million which Golar said it would seek to deploy to floating LNG growth projects.

“Golar is excited about new FLNG growth prospects, including those being pursued by NFE and plans to remain a supportive shareholder for the foreseeable future,” stated Golar Chief Executive Karl Fredrik Staubo in regards to the sale.

Golar LNG reorganized its business following the sale of the Hygo Energy Transition stake and Golar LNG Partners to New York-based LNG-to-power firm NFE.

Golar finalized the sale in 2021 of its 50 percent stake in Hygo Energy Transition, formerly known as Golar Power, and its 32 percent interest in its US affiliate Golar LNG Partners, both to NFE.

Hygo Energy itself was a joint venture set up between Golar and US private equity firm Stonepeak Infrastructure Partners.

Golar LNG shares had plunged more than 30 percent, on 26th of September 2020, when Hygo Energy was caught up briefly in a Brazilian corruption investigation.

Previous crisis

Golar’s stock fell after news emerged of Hygo Energy Chief Executive Eduardo Antonello being involved in a probe into certain activities before he had joined Hygo Energy. Antonello later stepped down from Hygo Energy over the controversy.

The corporate crisis came at a time when Hygo Energy was expanding its LNG-for-power projects in northeast Brazil. The business was subsequently purchased by NFE, led by its high-profile CEO Wes Edens.

The Golar assets sales deals involved NFE taking over Golar’s US unit, Golar LNG Partners. and the Hygo Energy stake.

The transactions were valued at the time at more than $5 billion in cash and assets and turned NFE into the leading gas-to-power company in Brazil while providing LNG shipping assets and experience.

NFE already had projects in Jamaica and Puerto Rico and later started LNG import ventures in Mexico and Nicaragua.

New Fortress Energy has filed applications with three US regulatory agencies to deploy its “Fast LNG” production system in the US Gulf of Mexico offshore Louisiana with start-up planned by 2023.

New Fortress Energy Inc., the US company with LNG-to-power projects in South America, the Caribbean and Sri Lanka in Asia, has executed a 15-year natural gas supply agreement in Brazil.

New Fortress signed the deal with a subsidiary of Norsk Hydro ASA for the supply of natural gas to the Alunorte Alumina Refinery in the northern Brazilian state of Pará.

New York-based New Fortress said it was advancing two Brazilian projects, one in Barcarena for Norsk Hydro and a second in Santa Catarina in southern Brazil.

The company said it was also positioned to supply LNG through the Santa Catarina terminal for power plants with more than 400 megawatts of capacity from the second quarter of 2022.

“The long-term partnership between Hydro and NFE will greatly benefit the state of Pará and Barcarena community,” said Wes Edens, Chairman and Chief Executive of New Fortress.

“Supply of natural gas from NFE’s Barcarena LNG terminal will support Hydro in shifting Alunorte to cleaner fuels and will significantly advance Brazil’s energy transition,” added Edens.

Under the GSA, New Fortress has agreed to supply Hydro with the equivalent to around 1 million gallons of LNG per day to the refinery from the company’s Barcarena LNG receiving and regasification facility.

Emissions targets

New Fortress said the conversion from oil-based fuel supply to natural gas will reduce the refinery’s annual carbon-dioxide emissions by an estimated 700,000 tonnes per annum and support Hydro's greenhouse-gas emissions reduction target.

“We are committed to invest in developing the world’s largest alumina refinery, and to reduce the greenhouse gas emissions,” said John Thuestad, Executive Vice President for Hydro Bauxite and Alumina.

“The fuel switch is a milestone in our sustainability strategy and an important demonstration of our commitment to support local development in Pará state,” added Thuestad.

When completed in 2022, New Fortress said that the Barcarena terminal was expected to be the sole point of LNG imports in the state of Pará and the North region of Brazil.

“The terminal will support industrial development and reduce emissions and pollution in the environmentally sensitive Amazon region by providing a cleaner, affordable and reliable alternative to oil-based fuels,” New Fortress explained.

In its Asian activities, New Fortress recently agreed to invest in West Coast Power Ltd , the owner of the 310-megawatts Yugadanavi Power Plant based in the Sri Lankan capital Colombo while also developing an LNG facility off the coast.

As part of that transaction, New Fortress will have gas supply rights to the Kerawalapitya Power Complex, where 310 MW of power is operational now and an additional 700 MW is scheduled to be built, of which 350 MW will be operational by 2023.

New Fortress Energy Inc., the US company with LNG-to-power projects in South America, the Caribbean and Sri Lanka in Asia, said completion work was being carried out on a new Nicaraguan import facility while its Mexican terminal in the state of Baja California Sur was now fully operational.

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.

Höegh LNG Partners, the US affiliate of Höegh LNG Holdings now partnered with the infrastructure unit of US investment bank Morgan Stanley, has entered into an agreement with New Fortress Energy for the charter of a floating storage and regasification unit.

Höegh LNG Partners said the “Höegh Gallant” has been chartered for a period of 10 years from the fourth quarter of 2021 to New Fortress with LNG-for-power projects in nations such as Mexico, Nicaragua, El Salvador, Jamaica and Brazil, as well as most recently in the Asian country of Sri Lanka.

The Höegh partnership has further entered into an agreement to suspend the existing charter for the “Höegh Gallant” with a subsidiary of Höegh LNG Holdings.

The LNG fleet controlled by Höegh LNG Partners consists of five vessels, mostly FSRUs that operate under long-term charters.

The vessels are the “Höegh Gallant”, the “Höegh Grace” and the “PGN FSRU Lampung” deployed in Indonesia, the “Cape Ann” and the “Neptune”.

Höegh shareholders had earlier approved an offer in March 2021 by a joint venture formed by Morgan Stanley Infrastructure Partners (MSIP) and Leif Höegh & Co., a family-owned Höegh shareholding, for a takeover.

The partnership said the charter rate for the “Höegh Gallant” would be lower than under the existing charter for the FSRU.

“However, under the Suspension Agreement, Höegh LNG's subsidiary shall compensate the partnership monthly for the difference between the charter rate earned under the new charter and the charter rate earned under the existing charter with the addition of a modest increase until July 31, 2025,” explained Höegh LNG Partners.

In addition, pursuant to the suspension agreement, certain capital expenditures incurred to ready and relocate the “Höegh Gallant” will be shared 50-50 between Höegh LNG Holdings and the Partnership.

The Höegh Board and the partnership’s “conflicts committee” have approved the new charter and the suspension agreement.

Sveinung Støhle, Chief Executive of Höegh LNG Partners, said the new long-term FSRU contract entered into with New Fortress was an important development for the partnership as it extends contract coverage and average charter lengths.

“The ‘Höegh Gallant’ will serve the Old Harbour facility in Jamaica, where its size and performance will enable New Fortress to further optimize its already highly successful operation,” added Støhle.

US company Argent Marine said it was the company behind the specially designed ISO containers that enabled the fast-track start-up of the New Fortress Energy import facility on the Pacific Coast of Mexico.

New Fortress Energy Inc., the US operator and developer of liquefied natural gas projects in the Americas, has signed a framework agreement with the Government of Sri Lanka to construct an LNG receiving, storage and regasification terminal offshore the capital of Colombo and with start-up scheduled for the second half of 2022.