New Fortress sees greater opportunities in Brazil, fast LNG

New Fortress Energy Inc (NFE) on Tuesday, November 2, 2021, reported a loss of US$9.8 million in its third quarter. On a per-share basis, the New York-based company said it had a loss of US$0.05. The company posted revenue of US$304.7 million in the period.

NFE, in its earnings call, reported on continued energy shortages in Brazil which have led to emergency power measures, including an auction in the south and south-east region which took place in October. NFE said it was well positioned to benefit.

The Government in Brazil awarded 1.2 GW of new power projects in an October auction with an average variable power price of $0.14 / kWh.

NFE said it is positioned to supply liquified natural gas (LNG) through the Santa Catarina terminal to over 400MW of new power plants.

The company also reported that NFE continues to make great progress on its first Fast LNG assets, which it intends to deploy through two distinct business lines: tolling agreements with client companies and merchant production where NFE aims to supply through owned infrastructure. Production will start in Q2 2022.

Fast LNG (FLNG) are plants featuring advanced liquefaction technology which is said to lower cost and speed deployment schedules.

NFE CEO Wesley Edens said during the earnings call that FLNG is “a) faster; and b) cheaper. So half as much time, half as much capital.”

Founder and CEO of New Fortress Energy Wes Edens (File photo)

He outlined, “…that’s essentially what we have with the Hilli, which we own 50 per cent. That’s a tolling relationship where we build, own and operate, we collect rent from high credit quality tenants. It produces stable and long-term cash flows.”

Hilli, located in Cameroon, was acquired when NFE bought Golar LNG Partners in January 2021. In the earnings call, Edens projected that the project “economics basically are right around $3.25 an MMBtu, and then they get paid another $0.05 for every $1 that Brent is higher than US$60 a barrel. So simply, in today’s market that will generate about $250 million to $300 million in capacity payments for this installation.”

Managing Director Andrew Dete in the earnings call outlined, “in the last few months, Brazil has been importing 19 million gallons a day in September and 18 million gallons a day in October, and on track for obviously a record year in terms of LNG supply and in terms of thermal power generation.

“And so while we’re seeing this increase, obviously, in thermal generation, driven by LNG, we expect to also see other energy shortages be answered by LNG in Brazil as well and the data are supporting that.”