Höegh LNG Readies for Start-Up of Colombian FSRU Project

Norway-based owner and operator of floating LNG import terminals, Höegh LNG, is preparing for the start-up of the Colombian FSRU project, which is scheduled to start commercial operations at the beginning of the fourth quarter of 2016.

The company said that a local office has been established in Cartagena and that its focus is on executing the start-up and ensuring a smooth transition to the operations phase for the group’s sixth FSRU project.

In addition, Höegh LNG said that all permits were issued for its Penco LNG FSRU project in Chile, previously named Octopus.

The company also revealed it is in preparations for the next FSRU newbuilding order and expects to receive bids on an early 2019 delivery from six international shipyards, with the tender issued in June.

The announcement comes on the back of the company’s financial results for the second quarter of this year. Höegh LNG recorded a profit of USD 3.5 million during the three-month period, a decrease of USD 2.5 million from USD 6 million in the same period last year.

The LNG market is oversupplied, a consequence of new LNG liquefaction projects having started operations and lower demand from some established markets. Current market fundamentals have been an important driver of demand for FSRUs in markets which have previously been unwilling or unable to buy LNG, the company said.

The company’s EBITDA was USD 27 million in the second quarter of 2016, compared to USD 23 million in the second quarter of 2015. According to the company, the results in the second quarter improved due to the contribution from its LNG tanker Höegh Gallant, which underwent maintenance works in the previous quarter, as well as from Höegh Grace, which was delivered on March 30, 2016.

Höegh Grace has been employed as an LNG carrier (LNGC) under a contract with Trafigura for the full quarter. The intermediate employment lasts until September 2016 after which the vessel will proceed to Cartagena, Colombia, to prepare for commissioning and start-up of the long term FSRU contract with SPEC.

“The LNGC spot and short-term market remains weak but with some signs of improvements from a very low base. With both LNGCs on long-term contracts, Höegh LNG currently has no exposure to the LNGC spot market,” Höegh LNG added.

Höegh LNG is currently pursuing several FSRU projects with expected start-up dates which match the delivery of its newbuilding FSRU#7.

Finally, the company said in its quarterly report that its primary focus will be to “maintain its position in the growing FSRU segment.”

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