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Fortress awaits LNG export permit, rubbishes claim of poor JPS deal

Published:Friday | July 17, 2015 | 7:00 AM

AS OF last week, the application by American LNG Marketing LLC, associate company of both Fortress Investment and New Fortress Energy, for a permit to export natural gas to countries that do not have a free-trade agreement with the United States - non-FTA countries - was still pending.

However, the company's application to export LNG to FTA nations from its Titusville, Florida plant, made in February, has been approved.

Jamaica falls in the non-FTA group.

Earlier this year, the nascent gas supplier applied for multi-contract authorisation to export liquefied natural gas to both trade categories.

American LNG, incorporated in Delaware, is self-described as being in the business of marketing liquefied natural gas in and outside the United States.

The company is controlled by Fortress Equity Partners, which is also the parent of New Fortress.

Energy sources say that the company is seeking expeditious approval of a non-FTA permit to facilitate its contract with the Jamaica Public Service Company, finalise the development of its Florida plant, and further its ambitions to supply gas within the Caribbean region.

Fortress has dismissed those claims, citing ESET's review of the project.

In June, the JPS started negotiations with New Fortress Energy, which won out of a field of eight bidders to provide a long-term natural gas solution for its power plants, starting with Bogue in Montego Bay.

JPS CEO Kelly Tomblin said the contract with Fortress is for 10 years only and that the LNG installations would begin on a small scale. The contract is awaiting sign-off by the Office of Utilities Regulation, she said.

JPS has contracted General Electric to convert the 115MW diesel plant at Bogue to LNG usage. Fortress is to develop the regasification and storage facility and supply the plant with gas.

The value of the two contracts are still undisclosed.

not yet approved

Earlier this week, an energy consultant who has worked in the United States and Jamaica, expressed concern that American LNG/Fortress was not yet approved to export gas to Jamaica.

Further, he said, Fortress has no current rights to gas supplies and would have to procure the commodity to sell to JPS; and that the company appears to be using Jamaica as a testing ground.

"Jamaica will be their first contract. When this is over, Fortress will own the equipment in Florida, except for a few small supply tanks here, and Jamaica will be left with nothing," said the consultant, who spoke with the Financial Gleaner after Tomblin revealed that JPS was seeking a tax waiver on gas imports on par with concessions to Petrojam for its oil purchases.

Noting his opposition to the tax break, he said the Fortress arrangement cannot be compared to Petrojam, whose infrastructure is owned by government and which provides the Jamaican Government with revenue.

Gordon Runte, the managing director of Fortress Investment Group LLC, rubbished the claims.

"The assertion by a nameless US-based energy consultant is patently ludicrous. The Electricity Sector Enterprise Team has reported that bringing LNG to Jamaica will enable Jamaicans to benefit from an estimated 30 per cent or greater drop in fuel costs by 2018, resulting in a savings of US$350 million," Runte said via email.

"Our Hialeah LNG liquefaction facility in Florida is expected to be completed in August, ahead of schedule. We look forward to continuing to work with JPS, agencies and regulators to bring LNG to Jamaica, which will be a transformative event for the Jamaican energy sector and a source of real and meaningful economic benefit for consumers," he said.

Tomblin was similarly dismissive of the criticism, saying the consultant's take was misinformed and unfortunate.

"They [Fortress] have a broad vision for investment in Jamaica and are proposing to bid on our larger gas supply in Old Harbour. I find it unfortunate that after we have tried to secure a gas supply and we finally find a credible one, critics emerge," said the power utility boss.

"Doing something that hasn't been done will always have some risks, but the time of searching for a risk-free, perfect solution is over," she added.

At the Office of Utilities Regulation, the director of regulation, policy, monitoring and enforcement, Ansord Hewitt, was said to be travelling abroad. The regulator did not otherwise comment up to press time on questions submitted to them.

American LNG's non-FTA application, made in March, is for 3.02 billion cubic feet per year (Bcf/yr) of LNG from its Hialeah plant in Medley, Florida.

The company's semi-annual report to the US Office of Natural Gas Regulatory Activities in April 2015 stated that construction of the Hialeah facility is ongoing, and that American LNG expects commercial LNG production to begin in September 2015.

"American LNG is in negotiations with potential counter-parties for sales of exported LNG. Exports of LNG from the Hialeah facility will commence sometime thereafter, depending on the outcome of the ongoing discussions," the report said.

The notice of application for non-FTA export also says that American LNG is seeking to export LNG "on its own behalf and as agent for other entities who hold title to the LNG at the time of export".

Fortress Investment Group is a global investment management firm with approximately US$66 billion of assets under management as of September 30, 2014. Its primary business is to sponsor the formation and provide investment management services for various investment funds and companies, the application for LNG export said.

avia.collinder@gleanerjm.com