Spain’s Naturgy has secured a contract extension for long-term LNG supply to Puerto Rico Electric Power Authority.
Previously set to expire in October 2020, the duo now extended the contract until 2032 ensuring the supply of power generation plants in Puerto Rico.
According to Naturgy, the deal covers an annual volume of 2 bcm. But it could also reach 3 bcm depending on the country’s needs.
Furthermore, Naturgy will use the US Henry Hub as the main index for the contracted price. The previous contract included an annual volume of 1.5 bcm with the price linked to oil and the Henry Hub.
The Spanish firm will deliver LNG from its portfolio of contracts. Naturgy says this would help reduce exposure to unsold volumes in the long term and bring purchase and sale prices into line.
Thus, over 50% of Naturgy’s American LNG procurement will be purchased and sold at the same price index and for a period of over 10 years, which mitigates risks and guarantees margin, the firm said.
At the same time, the duo reached another agreement to allow GPG to extend the current power purchase agreement until 2032. Naturgy holds a 75% stake in GPG through its investee company EcoElectrica.
“These agreements represent a significant step forward in Naturgy’s strategy to reduce the volatility and risks of our businesses, as they ensure a stable, long-term margin, both for the supply of LNG to Puerto Rico and for power generation thorough a 530-MV combined cycle, which supplies over 20% of the island’s electricity”, said Naturgy’s Chairman, Francisco Reynés.