Wed | Feb 19, 2020

New Fortress locks in 10 years of gas supplies

Published:Friday | February 14, 2020 | 12:13 AM

Chairman and CEO of New Fortress Energy Wes Edens speaks at the commissioning of the company’s Floating Storage Regasification Terminal in Jamaica in this July 19, 2019 photo.
Chairman and CEO of New Fortress Energy Wes Edens speaks at the commissioning of the company’s Floating Storage Regasification Terminal in Jamaica in this July 19, 2019 photo.

New Fortress Energy, NFE, has locked up a 10-year offtake agreement to procure natural gas from an unnamed supplier, which will fortify its inventory of LNG amid expansion into new markets.

Under its new gas sourcing contract, New Fortress will receive 27.5 million MMBtu of liquefied natural gas, LNG, annually, or approximately eight shipments per year, at a price indexed to Henry Hub, through to January 2030. The company filing did not name the supplier of the gas.

The Henry Hub natural gas spot price has been trading at just above US$2 per MMBtu on average so far this year.

“We evaluated a broad range of competitive offers to meet the expansion of our LNG terminals across international markets. We’re pleased to take advantage of the dislocation in global LNG markets and secure 10 years of offtake for our growing business,” New Fortress Chairman and CEO Wes Edens in a market filing. NFE trades on the Nasdaq exchange in New York.

The company declined further comment when contacted. Investors expect New Fortress to release its earnings report in mid-February.

The details of the new offtake arrangement were not disclosed, making it unclear whether the deal replaces or enhances existing suppliers to NFE. In 2016, NFE signed a sale and purchase agreement with a unit of American LNG to purchase up to 75,000 gallons of LNG per day, or 2.26 billion cubic feet per year, according to US Department of Energy fillings.

The American company formally began supplying natural gas in 2016, with Jamaica Public Service Company, JPS, as its only client at the time. Now it has 20 committed customers in Jamaica, inclusive of JPS, IGL, University of the West Indies, Red Stripe Jamaica, J. Wray & Nephew Limited, among others.

Last November, NFE disclosed to investors that it had 20 customers in Jamaica, and was negotiating potential arrangements with 35 more clients in the same market. It is also in the process of building out infrastructure in other jurisdictions, which will mean new foreign customers and geographic diversification of its revenue stream.

NFE remains the sole supplier of LNG to Jamaica.

steven.jackson@gleanerjm.com