US LNG player New Fortress Energy has secured a one-year extension of its 80 TBtu islandwide gas supply contract with the Puerto Rico Electric Power Authority.
In addition, the 10-year operation and maintenance agreement between NFE’s subsidiary Genera and PREPA will be modified to eliminate future incentive payments in exchange for a $110 million payment, NFE said on Monday.
NFE said it has worked closely with Puerto Rico Governor Jenniffer Gonzalez-Colon, the Puerto Rico Energy Bureau (PREB), the Puerto Rico Public-Private Partnerships Authority (P3A), and PREPA to streamline the incentive structure.
Under the islandwide gas supply contract, there is “substantial” capacity to supply both NFE’s current downstream gas demand as well as other legacy power plants running on diesel that can be converted to run on natural gas, NFE noted.
These conversions are a “tremendous opportunity for NFE and Puerto Rico alike to generate substantial cost savings and significantly reduce emissions, and also lay the groundwork for new long-term, cost-effective and sustainable power solutions on the island,” the firm said.
By providing natural gas, NFE claims it has “already saved Puerto Rico over $500 million thus far in fuel savings, and the extended gas supply contract offers pathways to billions of dollars of potential savings in the future.”
LNG-to-power
Last year, NFE sold two of its operating power plans to PREPA, while it also secured a new gas supply contract from the latter.
The company sold the emergency power plants it constructed on behalf of the US Army Corps of Engineers in San Juan and Palo Seco to PREPA for $373 million in cash.
In January this year, NFE also signed a long-term deal with Energiza to supply natural gas to the latter’s 478 MW combined-cycle power plant being developed in San Juan, Puerto Rico.
The power plant is located adjacent to NFE’s existing San Juan LNG import terminal, which was commissioned in April 2020.