Sun | Aug 9, 2020

LNG supplier sources cheaper gas to feed Jamaica

Published:Sunday | July 12, 2020 | 12:20 AM
Chairman of New Fortress Energy, Wes Edens.
Chairman of New Fortress Energy, Wes Edens.

New Fortress Energy, the sole natural gas supplier to Jamaica, announced in July that it would buy gas on the open market after terminating a deal to buy more expensive gas contracts, but it is not clear whether it will result in cheaper light bills for local consumers.

The New York-based company, with operations mainly in Jamaica, announced that it had entered into an agreement with Centrica LNG Company Limited to terminate New Fortress’s obligation to purchase any additional LNG from Centrica for the remainder of 2020 in exchange for a payment of US$105 million. New Fortress expects to buy gas at US$2.25 to US$3.34 per million barrels (MMBtu) for the remainder of 2020. Previously, up to December 2019, it was buying from unnamed suppliers at US$8.81 per MMBtu.

Investors in NFE rewarded the company and rocketed the stock price 30 per cent higher in the week. The Financial Gleaner still awaits responses from key buyer the Jamaica Public Service Company since last Monday on whether consumers could expect savings on their light bills as they would have done with a drop in oil prices.

The Office of Utilities Regulation told the Financial Gleaner that its technical team would look at the development and make their assessments before responding to queries.

As a result of its new deal, New Fortress said it will now be able to purchase LNG in the open market at prices that are significantly lower than the price previously agreed to with Centrica.

“Our flexibility to opportunistically purchase LNG at market prices completes our transition from a development company to an operating company that we expect will generate significant operating margin and cash flow. We continue to advance a number of compelling new business opportunities and expect significant growth in 2020 and beyond,” said CEO and Chairman Wes Edens in a press release.

In spite of the current COVID-19 conditions, Edens said his company remains robust with a pipeline of four to eight additional projects by 2021.

“We look forward to bringing more affordable and cleaner natural gas and power to our customers this year,” he added.

The company earlier this year began supplying gas to Puerto Rico and is advancing projects in Mexico and Nicaragua.