Hoegh LNG’s FSRU starts charter with Australia’s AIE

Hoegh LNG’s 2019-built FSRU Hoegh Galleon has started its long-term charter contract with Squadron Energy’s Australian Industrial Energy (AIE).

Last year, Hoegh LNG and AIE confirmed the long-term FSRU charter deal for the latter’s Port Kembla import terminal in New South Wales.

The FSRU contract has a term of 15 years with early termination options for AIE after year 5 and 10.

However, the Port Kembla terminal has not been completed yet and Squadron Energy expects to launch the facility in winter 2025/2026, according to its website.

The vessel will probably work as an LNG carrier in the meantime and AIE may subcharter the unit.

Hoegh said in its third-quarter results report on Thursday that the 170,000-cbm Hoegh Galleon ended its short-term time charter contract in the LNG carrier market at the end of September.

“From the beginning of the fourth quarter, the vessel commenced its long-term contract with AIE,” Hoegh said.

The FSRU player did not provide any additional information.

FSRU fleet

Hoegh’s fleet comprises ten FSRUs and three LNG carriers.

The entire fleet is either operating under or committed to long-term contracts with “strong” counterparties, except the purchased LNG carrier Hoegh Gandria which is currently employed on a one-year LNG carrier contract ending in March 2024, Hoegh said.

The average remaining contract length per vessel was 7 years at the end of September 2023, it said.

According to Hoegh, the fleet overall has delivered a “stable” operating performance in the third quarter, although Hoegh Galleon was idle for 10 days at the end of September, before starting its long-term contract with AIE.

German contract

In the third quarter, the 170,000-cbm FSRU Hoegh Gannet continued its commissioning work in Germany.

The commissioning was successfully completed in November, when the FSRU started commercial regas operations, it said.

Hoegh said the FSRU earned regular charter hire from its charterer during the commissioning period.

German energy firm RWE, which developed the Elbehafen LNG project with Hoegh LNG, Brunsbüttel Ports, and other partners on behalf of the German government, said in May that the FSRU-based terminal started operations.

State-owned LNG terminal operator Deutsche Energy Terminal recently allocated 60 regasification slots at two of its FSRU-based terminals in Germany, including this facility.

France and Brazil

Besides this FSRU, Hoegh noted that the 2010-built 145,130-cbm FSRU, Cape Ann, which is employed on a long-term charter with French energy giant TotalEnergies, was repositioned to Le Havre in France in September.

At the end of October, Cape Ann finalized its commissioning and started to deliver natural gas to the grid as France’s first FSRU, Hoegh said.

The FSRU also recently received it first LNG carrier in Le Havre.

In addition to these units, Hoegh Giant started its long-term contract with TSRP/Compass in Brazil from beginning of the third quarter.

Hoegh said in February it planned to send its 170,000-cbm FSRU Hoegh Giant in the second quarter of this year to Brazil to start the previously signed contract with a unit of Brazilian energy company Cosan.

Back in December 2021, Hoegh concluded the 10-year FSRU charter with Terminal de Regaseificacao de GNL de Sao Paulo (TRSP), a unit of Cosan’s Compass Gas & Energia, to serve the latter’s project in the Port of Santos with a regasification capacity of 14 million cbm/day.

New FSRU projects

Hoegh said that the demand for FSRUs is expected to “remain strong.”

While Hoegh has secured long-term contracts for its entire fleet of FSRUs, the business development team is in “active dialogue with several potential new projects looking for FSRU capacity,” the firm said.

The acquisition of the LNG carrier Hoegh Gandria earlier this year provides flexibility to pursue FSRU conversion opportunities, Hoegh noted.

The group reported a total income of $131 million and an Ebitda of $89.4 million for the third quarter of 2023, compared to $126.8 million and $78.7 million for the preceding quarter.

The increase in Ebitda of $10.7 million during the third quarter was primarily due to the full employment of Hoegh Giant and Hoegh Gandria which resulted in higher time charter revenues, it said.

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