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The US$ 5 Billion Investment in Brazil Marks the Company’s Entry and Consolidates It as the Largest in ‘Gas-to-Power’ Projects (Integrating Gas and Electric Energy) in the Country
New Fortress Energy (NFE) announced yesterday (01/13) that it is acquiring Golar LNG Partners LP (GMLP) and Hygo Energy in a deal valued at US$ 5 billion that expands operations in Brazil and Latin America, as well as providing liquefied natural gas (LNG) transportation assets. Pre-Salt Oil Filled the Union’s Coffers in 2020 with an Injection of R$ 704.2 Million
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The agreement strengthens NFE’s core business of introducing liquefied natural gas to markets that lack access to energy generation and other needs. The acquisition also expands the company’s LNG import terminals to nine from five that are operational or under development, particularly in Brazil, which is expected to boost LNG demand in Latin America over the next decade.
“With a strong presence in Brazil and a world-class LNG transportation business, Hygo and GMLP are excellent additions to our efforts to accelerate the global energy transition”, said NFE CEO Wes Edens. “The addition of Hygo will rapidly expand our presence in South America with three gas-to-power projects in the large and fast-growing Brazilian market. With GMLP, we gain world-class LNG ships and operators that are ideal for supporting our existing terminals and robust pipelines.”
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Gas and Energy Projects in Brazil
From Hygo, NFE would acquire an operational FSRU vessel and a 50% stake in a 1,500 MW plant in Sergipe, as well as two FSRU terminals with 1,200 MW under development. Hygo’s fleet also consists of a newly built FSRU and two operational LNG carriers that will be acquired. NFE would also acquire GMLP’s fleet of six FSRUs, four LNG carriers, and a 50% stake in the first two production units of Hilli Episeyo, a floating liquefaction vessel.
The merger agreements would give the company a foothold in Brazil, where natural gas energy is primarily used as a backup for hydropower and is valued for its flexibility. According to the Berkeley Research Group, natural gas power generation in Brazil could grow by 20 GW by 2040, rising to 15% from 9% of the energy mix.
Under the terms of the transaction, NFE agreed to exchange 31.4 million Class A common shares and US$ 580 million for all outstanding shares of Hygo. The agreement with Hygo has an enterprise value of US$ 3.1 billion and an equity value of US$ 2.18 billion. NFE also agreed to acquire GMLP’s common units at US$ 3.55 each, an agreement with an enterprise value of US$ 1.9 billion and US$ 251 million in equity value. The divestiture of Hygo and GMLP would reduce the fleet under the umbrella of Golar LNG Ltd. by about half.
The board and shareholders of Hygo approved the acquisition. The board of GMLP also approved the transaction, which is subject to shareholder approval. The transactions are expected to close by the end of June.
NFE’s Expansion in the Liquefied Natural Gas Market – LNG
The Golar companies are pioneers in floating liquefaction technologies. NFE went public last year and has continued its transition to an operational company. NFE operates or is developing small-scale LNG assets worldwide, including import terminals, fuel management facilities, regasification infrastructure, gas plants, and midstream facilities in the Caribbean, Europe, Latin America, and the United States. In Latin America, NFE expects to bring LNG projects online this year in Mexico and Nicaragua.
NFE is also expanding into the hydrogen market with an investment in H2Pro, an Israel-based startup developing hydrogen production technology. Through a new division called Zero, it has also partnered on a gas power plant project in Ohio that would mix hydrogen to produce electricity.
NFE shares “our vision of providing cheaper and cleaner energy for a growing population”, said Golar LNG president Tor Olav Trøim. “The consolidation of two of the entrepreneurial downstream LNG players gives the company better access to capital and creates a unique global energy transition company, of which the shareholders of Golar will benefit from being part of the future.”
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