Hoegh Confirms Setback to Pakistan Project
Uncertainties hang over Pakistan and Ghana floating LNG import projects, said ship operator Hoegh LNG, reporting lower year on year profits in 3Q, but higher profits in the 9M period.
Last year Hoegh contracted to provide a floating storage and regasification unit (FSRU) to Pakistan developer GEI. However in its 3Q results statement Hoegh November 16 said that “by mid-November it has been concluded that no agreement with GEI could be found and the consortium has consequently been dissolved.”
Hoegh confirmed that "LNG sellers" – in this context understood to be Exxon, Total, Qatar Petroleum and possibly Mitsubishi – had withdrawn from the consortium, delaying the original start-up date for the GEI project, and thus “Hoegh LNG is evaluating its options with respect to the FSRU contract with GEI.” Exxon's departure from the project was already being reported by local press in late October.
In Ghana too, Hoegh said the Quantum Power/Hoegh FSRU project in Ghana “remains subject to government approval” – in other words, no difference from what it reported three months ago, when the project timeline was already lagging. “A positive award will lead to final investment decision pending financial close for the offshore pipeline and spread mooring system to connect the FSRU to the onshore gas grid in eastern Ghana. Start-up under the FSRU contract is expected nine to 12 months after construction begins,” said Golar. Yet it did not this time state mid-2018 as start-up target date for the project. FSRU Hoegh Giant (pictured), earmarked for Ghana, is to be used by Spanish trader Gas Natural; the time charter lasts 3 years from early 2018 but an alternative FSRU can be substituted by Hoegh as required.
Hoegh noted a recent Gazprom long-term LNG supply agreement with Ghana as “underpinning” the country’s desire to start LNG imports, but those Gazprom supplies do not start before 2019.
In Chile too, where Hoegh is to provide an FSRU to the Penco LNG project, it noted extensive consultations with local stakeholders continue, and uncertainties remain over the timeline.
Hoegh LNG reported net profit in 3Q of $1.11mn, down two-thirds from $3.33mn in 3Q2016. Profit for 9M this year in contrast was $21.1mn, up roughly half on the $13.2mn made in 9M2016. Profits in 3Q were lower due to $11.9mn of provisions made with regards to performance guarantees on Neptune (deployed as an FSRU in Turkey) and GDF Suez Cape Ann (similarly used in China).
Hoegh LNG also announced November 16 an agreement to sell its remaining 49% interest in FSRU Höegh Grace, in service in Colombia, to shipowning partner Hoegh LNG Partners for $172.5mn, less $86.6m pro rata debt arising from a credit facility up to related to January 2018.
Mark Smedley