New Fortress Energy (NFE) expects to start producing LNG at its first FLNG project this month
NFE’s first FLNG, 1.4M tonne per annum (mta) Altamira, located offshore the Mexican city of Altamira has suffered a few delays already. Last year, NFE said it expected to introduce first gas in September and to sell the inaugural LNG cargo in October. That was later pushed to December 2023.
Altamira reached mechanical completion in January this year and the first full cargo is expected in June.
In a first-quarter results earnings call on 8 May, NFE said the project is in the final stages of commissioning but confirmed a minor accident aboard the unit in April.
NFE chief financial officer Chris Guinta said, “We’ve fully commissioned all safety systems, power and utilities equipment, the gas treatment modules, LNG pumps and the LNG transfer hoses and we’re working on the final system to be completed, which is the MR compressor.”
NFE confirmed the FLNG’s cold box – the structure that protects the cryogenic equipment – suffered a pipe fracture on 26 April. “This is an extremely unfortunate given that [were] expecting first LNG a mere 72 hours later,” he added.
The accident aboard Altamira was isolated to one pipe and manifold in the cold box, spilling perlite.
No injuries were sustained and the damage is expected to be rectified later this month with production beginning soon after and the first full cargo due in June.
To secure financing, NFE has opted for a project bond, even though the company had the option of financing the asset on balance sheet using corporate debt while it was under development.
“We are targeting US$1.5Bn to US$1.7Bn in proceeds which represents a low loan to value given the asset exceeds US$3.0Bn,” Mr Guinta said.
The company values the FLNG at over US$3.0Bn. In the earnings call, Mr Guinta said this owes to a combination of the cost of replicating the liquefier and the time value of having production in an “elevated market for global LNG.”
The second reason is because NFE’s FLNG asset will produce approximately 280 TBtus or a little more than 90 cargoes over the next four years, which is when the majority of the projects recently FID will come online.
The value of this LNG sold into the current market is worth another US$1.0Bn.
NFE reported net income of US$57M in Q1 2024, down from US$152M in the same quarter last year. The company’s revenue rose to US$690M in Q1 2024, up from US$579M in the corresponding period last year.
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