Lampung FSRU dispute hits Hoegh LNG’s results

Floating player Hoegh LNG has logged a net loss of $19.4 million in the second quarter, mainly due to the ongoing dispute regarding the charter of the Lampung FSRU in Indonesia.

To remind, Hoegh’s New York-listed MLP Hoegh LNG Partners has filed a countersuit against Indonesian state-owned gas firm PT Perusahaan Gas Negara (PGN), a unit of Pertamina, over issues related to the Lampung FSRU charter.

The vessel serves a 20-year charter deal with PGN LNG, a unit of PGN, off the southeast coast of Sumatra in Indonesia. Hoegh manages the FSRU while its Hoegh LNG Partners owns it.

This dispute has caused problems for the partnership that is now looking to arrange alternative refinancing or rearrange the existing refinancing for the FSRU.

Net loss

It has also affected Hoegh’s overall results and the firm on Friday reported a net loss of $19.4 million, compared to a profit of $2.9 million in the second quarter last year.

Hoegh said this “mainly reflects certain one-off financing costs, including costs related to the refinancing of PGN FSRU Lampung which have been expensed in full due to the issues with completing the arranged refinancing.”

The result also includes a tax provision of $10.6 million which was recorded for a tax uncertainty following the conclusion by the Indonesian tax authority’s 2019 tax audit of a
a subsidiary of the group, Hoegh said.

Hoegh reported a total income of $87 million for the second quarter of 2021, compared with $82.2 million in the corresponding quarter and $83.9 million in the prior quarter.

The LNG firm attributed the increase mainly due to a compensation received from AGL following the termination of the FSRU project at Crib Point.

Also, Hoegh reported an Ebitda of $52.7 million, down from 57.7 million in the corresponding quarter but up from $51.8 million in the preceding three months.

Hunting for FSRU contracts

The group’s fleet consists of ten modern FSRUs and two LNG carriers. Hoegh LNG Partners operates five of these vessels.

Following the execution of a 12-month interim LNG carrier charter for Hoegh Esperanza from June this year, the company has 100% contract coverage for 2021.

“Höegh LNG’s main commercial focus is to conclude firm long-term FSRU employment for the four units currently trading on interim LNGC contracts,” the firm said.

The company said it continues to develop its pipeline of FSRU projects and has achieved “several important milestones” over the quarter.

Hoegh said it continues to work with Australian Industrial Energy (AIE) on optimizing the charter contract for its Port Kembla project. AIE has already started construction of the onshore infrastructure, according to Hoegh.

AIE, owned by Australian businessman Andrew Forrest’s Squadron Energy, has previously selected the Hoegh Galleon as the project’s FSRU, but the firm still needs to take a final investment decision.

The Port Kembla terminal, claimed to be Australia’s first LNG import facility, will have the capacity to deliver over 100 petajoules of natural gas each year. This represents about 75 percent of NSW total market needs, according to AIE.

In addition to the talks with AIE, Hoegh added that it was “also working with utility customers to secure two further contracts.”

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