Egypt Bids Farewell to FSRU

Egypt and Hoegh LNG Holdings have amended the time charter for Hoegh Gallant so that after three years' service as a floating storage and regasification unit (FSRU), it may now be used instead as an LNG carrier on international routes.

Egypt said it permanently halted LNG imports last month. Hoegh LNG Holdings said October 15 that it and state-owned Egypt Natural Gas Holdings Company (Egas) have amended the contract so that a third party may use it as an LNG carrier. Egas will compensate Hoegh for the rate difference between the original FSRU contract and the new LNG-carrier time charter. The amended contract is expected to become effective this month and run to April 2020, the termination date of the original five-year FSRU contract.  

Earlier this year Hoegh acknowledged that Egypt had asked to release it from the charter before April 2020. (Banner photo shows the FSRU, courtesy of Hoegh LNG)

Reuters quoted October 16 Egypt's petroleum minister Tarek el-Molla saying that FSRU Hoegh Gallant would leave Egypt before the end of this week. There's no word yet on whether BW Gas, owner of the other FSRU deployed since 2015 at the country's Red Sea port of Ain Sokhna, namely BW Singapore, would leave before the nominal 2020 end of its contract.

In its October 15 statement Hoegh LNG CEO Sveinung Stohle said: “We are proud to have provided FSRU services to Egas since 2015, during a period in which Höegh Gallant’s regasification capacity has been fully utilised, and contributing strongly to balancing supply with demand in the Egyptian natural gas market. Under this amended contract we maintain our highly valued relationship with Egas, which we hope to further expand in the future as Egypt emerges as a regional energy hub.” The shipowner said it had installed certain equipment on the jetty in Ain Sokhna on the Red Sea coast of Egypt, the book value of which was $9mn as end-June 2018; it now expects to record an impairment for a corresponding amount in its 3Q 2018 results.