New Fortress Ends Centrica LNG Deal (Update)
(Adds comment from Centrica in para 2)
US New Fortress Energy has reached an agreement terminating its obligation to buy further LNG supplies from the UK's Centrica LNG this year, in exchange for a $105mn payment, it said on July 6. The deal will enable it to instead buy LNG supplies on the open market at "significantly lower" prices, the company said.
Centrica LNG, a division of UK multinational Centrica secured a three-year agreement to supply LNG to New Fortress' import terminal in Jamaica in 2017. It told NGW: "We have a contract to supply New Fortress Energy with one cargo a month until the end of 2021 but at their request we have cancelled the remaining cargoes for this year. We value New Fortress Energy as a long term customer and look forward to restarting deliveries again in January 2021."
New Fortress operates LNG import and export infrastructure, as well as gas-fired power facilities. “Our flexibility to opportunistically purchase LNG at market prices completes our transition from a development company to an operating company that we expect will generate significant operating margin and cash flow. We continue to advance a number of compelling new business opportunities and expect significant growth in 2020 and beyond," New Fortress CEO Wes Edens said. "In spite of the current Covid conditions, we have a very robust pipeline of additional projects. Our current goal is to bring online another 4-8 projects in 2021 of similar size and scale. We look forward to bringing more affordable and cleaner natural gas and power to our customers this year."