Hoegh and EGAS firm up FSRU time charter for Q1 2015 start

Norwegian-based ship owner Hoegh LNG said on Monday it had signed a five-year time charter contract with Egypt’s EGAS that will start by the end of the first quarter of 2015.

The contract refers to the delivery of a floating storage and regasification (FSRU) vessel which would help deliver gas to Egypt’s chronically short domestic market.

The newbuild 170,000cbm Hoegh Gallant has been undertaking sea trials around South Korea over the last few months amid reports of ongoing delays to its potential employment as the planned Egyptian import terminal and uncertainty over contract details.

The vessel was originally due to be delivered into Egypt’s Ain Sokhna in August but this was later put back to December. Hoegh said it is considering how it could utilise the vessel as an LNG carrier before it is delivered to the Egyptian port.

Hoegh said the FSRU contract is expected to generate an average annual EBITDA (earnings before interest, taxes, depreciation, and amortization) of $40m. This would equate to a daily fee of around $110,000 based on a 365-day/year utilisation of the vessel. However, with additional operating costs estimated to be $20,000/day, according to one ship analyst, the total charter hire would be closer to approximately $130,000/day.

The media has been full of reports of rumoured LNG supply deals into Egypt. A story from the local press on Saturday 1 November cited a government official as saying previous agreements with Russia’s Gazprom and Algeria’s Sonatrach were not binding.

Stories appear almost daily from Egypt over the cuts in gas supply to the power grid and to industrial users.

LNG exports from the country’s two liquefaction plants has all but ceased due to the lack of available feedgas.

Ongoing negotiations over how to develop further import infrastructure are focused on pipe links to the Israeli Tamar and Leviathan gas fields.

Hoegh on Monday also said it had been awarded an FSRU contract by Colombian Sociedad Portuaria El Cayao (SPEC) for a new LNG import terminal in Cartagena, on the Atlantic coast.

The contract is subject to SPEC obtaining necessary environmental licenses for the project, which is expected to start operations mid-2016, Hoegh said. Edward Cox