(Höegh LNG, 21.Nov.2019) — Höegh LNG Partners LP provided its quarterly outlook for the LNG market with details on its operations in Cartagena, Colombia.
A subsidiary of the Partnership, as the owner of the Höegh Gallant, has a lease and maintenance agreement with EgyptCo until April 2020. To date, the Partnership has not entered a new contract for the Höegh Gallant from April 2020. Pursuant to an option agreement, the Partnership has the right to cause Höegh LNG to charter the Höegh Gallant from the expiration or termination of the EgyptCo charter until July 2025, at a rate equal to 90% of the rate payable pursuant to the current charter with EgyptCo, plus any incremental taxes or operating expenses as a result of the new charter. Höegh LNG’s ability to make payments to the Partnership with respect to an exercise of the option by the Partnership may be affected by events beyond either of the control of Höegh LNG or the Partnership, including opportunities to obtain new employment for the vessel, prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, Höegh LNG’s ability to meet its obligations to the Partnership may be impaired. If Höegh LNG is unable to meet its obligations to the Partnership for the option, the Partnership’s financial condition, results of operations and ability to make cash distributions to unitholders could be materially adversely affected.
A Joint Development Agreement (JDA) was signed by Höegh LNG, our charterer; Sociedad Portuaria El Cayao S.A. E.S.P. (SPEC), and Calamari LNG S.A. E.S.P. and Avenir LNG Limited, a related part of Höegh LNG. Under the JDA, the parties will explore providing additional LNG services to be offered by SPEC from its Colombia´s LNG Import Terminal in Cartagena, Colombia. The additional services which are planned to be provided directly from the Höegh Grace, include gas up or cool down services for LNG cargos on conventional LNG carriers and reloading of small LNG cargoes for onward distribution throughout Latin America and the Caribbean. The JDA would require an amendment to the time charter contract with SPEC for the Höegh Grace to provide for the additional service offering. There is expected to be additional compensation for certain of the services of a marginal nature with no material impact to the results of operations.
Pursuant to the omnibus agreement that the Partnership entered into with Höegh LNG at the time of the initial public offering, Höegh LNG is obligated to offer to the Partnership any floating storage and regasification unit (FSRU) or LNG carrier operating under a charter of five or more years.
Höegh LNG is actively pursuing the following projects that are subject to a number of conditions, outside its control, impacting the timing and the ability of such projects to go forward. The Partnership may have the opportunity in the future to acquire the FSRUs listed below, when operating under a charter of five years or more, if one of the following projects is fulfilled:
— On December 21, 2018, Höegh LNG announced that it had entered a contract with AGL Shipping Pty Ltd. (AGL), a subsidiary of AGL Energy Ltd., to provide an FSRU to service AGL’s proposed import facility in Victoria, Australia. The contract is for a period of 10 years and is subject to AGL’s final investment decision by the board of directors of AGL Energy Ltd. for the project and obtaining necessary regulatory and environmental approvals.
— Höegh LNG has also won exclusivity to provide an FSRU for potential projects for Australian Industrial Energy (AIE) at Port Kembla, Australia and for another company in the Asian market. Both projects are dependent on a variety of regulatory approvals or permits as well as final investment decisions.
Höegh LNG has four operating FSRUs, the Höegh Giant (HHI Hull No. 2552), delivered from the shipyard on April 27, 2017, the Höegh Esperanza (HHI Hull No. 2865), delivered from the shipyard on April 5, 2018, Höegh Gannet (HHI Hull No. 2909), delivered from the shipyard on December 6, 2018, and the Höegh Galleon (SHI Hull No. 2220), delivered from the shipyard on August 27, 2019.
The Höegh Giant is operating on a three-year contract that commenced on February 7, 2018 with Gas Natural SGD, SA (Gas Natural Fenosa).
The Höegh Esperanza is operating on a three-year contract that commenced on June 7, 2018 with CNOOC Gas & Power Trading and Marketing Ltd. (CNOOC) which has an option for a one-year extension.
The Höegh Gannet serves on a 15 month LNGC contract with Naturgy.
The Höegh Galleon operates on an interim LNGC contract with Cheniere Marketing International LLP (Cheniere) that commenced in September 2019.
Pursuant to the terms of the omnibus agreement, the Partnership will have the right to purchase the Höegh Giant, the Höegh Esperanza, the Höegh Gannet and the Höegh Galleon following acceptance by the respective charterer of the related FSRU under a contract of five years or more, subject to reaching an agreement with Höegh LNG regarding the purchase price.
There can be no assurance that the Partnership will acquire any vessels from Höegh LNG or of the terms upon which any such acquisition may be made.