Golar, Hoegh Join Stolt's Avenir LNG

Rival specialist LNG ship and terminal owners Golar and Hoegh announced October 1 that they have each invested $24.75mn for a 25% equity stake each in Avenir LNG.

Avenir LNG was originally formed by Stolt-Nielsen in 2017 to provide LNG to markets lacking access to LNG pipelines.  Stolt-Nielsen initially will remain the largest shareholder with ownership of 50%. However Avenir LNG contemplates a public listing at the Oslo over-the-counter market some time during 2018 at which point shareholdings may change.

The investment is part of a combined commitment of "up to $182mn" by the trio "for the pursuit of opportunities in small-scale LNG, including the delivery of LNG to areas of stranded demand, the development of LNG bunkering services and supply to the transportation sector," they said.

Bulk liquids shipowner Stolt-Nielsen said it consolidate all its existing LNG activities into Avenir. These include not only four small-scale LNG carriers currently under construction at Keppel Singmarine in Nantong, China but also an LNG terminal and distribution facility under development in the Italian port of Oristano  on the west coast of Sardinia. Avenir LNG plans to source and ship LNG to the terminal using small LNG carriers, and distribute the LNG in trucks and through regasification into the local gas grid. Reports said that initial works at the Oristano project, known as HiGas, began in April 2018. 

Stolt-Nielsen three years ago acquired a 10% interest in the HiGas venture, with an option then to acquire up to 80% of the company - which NGW understands has yet to be exercised.

Avenir LNG plans to use best-in-class capabilities of its anchor investors to build a global presence as the leading provider of small-scale LNG and will be among the first movers in this market, the trio said. Stolt-Nielsen added that the $182mn would be contributed as cash and equity-in-kind and fund the construction of six small-scale LNG carriers, a small-scale storage terminal and regas facilities.

Golar LNG CEO Iain Ross said, "Small scale LNG transportation and distribution represents an exciting new market with significant growth prospects. Avenir is the right vehicle for this market entry and its formation builds on the teaming agreement signed with Stolt-Nielsen in June 2015." His Hoegh counterpart Sveining Stohle said: "We are pleased to be partnering with Stolt-Nielsen and Golar LNG."

Stolt-Nielsen's success in recruiting investors to its small-scale LNG venture contrasts with the fate of IM Skaugen, which had a similar strategy in Africa but ended up filing for bankruptcy protection in May 2018; IM Skaugen informed bondholders September 25 that its planned restructuring had failed, after Danish bank Nordea withdrew financing, and that it was considering its options.

Update 6pm Nov.13: Golar, Hoegh and Stolt-Nielsen said their private placement of shares to fund Avenir LNG has completed, with 110mn new shares in Avenir issued at $1 each among the trio. The issue of a further 11mn new Avenir LNG shares to institutional investors is to close later on November 13, they said.

Avenir LNG will be listed on the N-OTC (a marketplace for unlisted Norwegian shares) with effect from November 14 2018 at which point Stolt-Nielsen will hold 45% of the shares, with Golar LNG and Hoegh LNG each holding 22.5%, and 10% held by institutional investors.