Excelerate working on additional LNG deals, CEO says

Excelerate operates ten FSRUs, one of the world’s largest fleets of such vessels, and these units are located worldwide.

In addition to these 10 FSRUs, Excelerate also ordered one 174,000-cbm FSRU at South Korea’s HD Hyundai Heavy Industries in 2022.

In May this year, Excelerate revealed a list of 12 prioritized regasification projects saying that a number of these projects will require new FSRUs.

“Several of these projects would require a smaller send-out vessel, making them ideal for FSRU conversions,” Kobos said during Exelerate’s third-quarter earnings call on Friday.

“Our team is currently evaluating LNG carrier candidates and is analyzing cost-efficient conversion options for our integrated terminal projects. We are eyeing an LNG carrier acquisition in 2025,” he said.

In the near term, Excelerate is going to need an LNG carrier to support future deliveries of LNG volumes in its portfolio.

Excelerate’s LNG supply strategy complements its core regasification business.

The company is establishing a diversified supply portfolio to support its LNG sale and purchase agreements.

Excelerate previously signed two long-term LNG SPAs with QatarEnergy and Venture Global LNG.

Under the SPA with QatarEnergy, Excelerate will buy up to one mtpa of LNG to be delivered to FSRUs in Bangladesh for 15 years starting in January 2026.

Moreover, under the 20-year SPA with Venture Global, Excelerate will buy 0.7 million tonnes per annum of LNG on a free on board (FOB) basis from the Plaquemines LNG facility in Plaquemines Parish, Louisiana.

More LNG deals

“Our LNG marketing team is pursuing additional deals to further optimize our supply portfolio,” Kobos said.

In the third quarter, Excelerate signed medium-term agreements for LNG purchases and sales in “one of the Atlantic Basin regions in which we do business,” he said.

“Over the terms of these agreements, we will purchase and sell in total approximately 0.65 million tons of LNG. The pricing will be based on a major European natural gas index,” Kobos said.

Excelerate expects that the first purchase will be made during the fourth quarter of 2024.

“This is a great deal for Excelerate because it furthers our efforts to expand our portfolio. It also helps to derisk the investment we plan to make next year in the LNG carrier that would eventually serve as our first FSRU conversion,” Kobos said.

FSRU conversion for smaller project

Answering a question regarding the FSRU conversion during the call, Excelerate CCO David Liner that the converted FSRU would probably be for “one of the smaller projects that are in our pipeline.”

“And we expect that to be a versatile vessel… It wouldn’t just be Cook Inlet or environmentally sensitive areas. It could really go anywhere, but it would be targeted for those smaller send-out customers,” he said.

Liner also discussed the timeline and how long the conversion would take.

“By having that asset available to us in 2025, we get to start on the engineering. For a conversion project, you can’t do the conversion without the long lead items. You can’t do the long lead items without engineering. And you can’t do the engineering without a vessel,” he said.

“And so, by getting our hands on a vessel, we’re starting the timeline to bring that vessel to market,” he said.

“So, in terms of total timeline, last earnings call, we spoke about a new vessel that was on the order of three to three and a half years to bring that to market. Conversion is considerably less than that, notionally a year less than that, but it’s very dependent on the specification. Also, the donor vessel that you’re going to use for that conversion. There’s a lot of things that go into driving the timeline on a conversion,” Liner said.

In addition, Exclerate can use the LNG carrier to deliver LNG volumes, while the company is working on engineering for the conversion.

“That’s the beauty of this model. We get to trade that asset while we’re preparing for the conversion. And so, you don’t have to absorb months or even longer of downtime on an idle vessel while you do all that engineering work,” he said.