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The US$ 5 billion in investments in Brazil mark the company's entry and consolidates it as the largest in 'gas-to-power' projects (which integrate gas and electricity) in the country
New Fortress Energy -NFE, said yesterday (13/01), 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 beyond to provide liquefied natural gas (LNG) transportation assets. Pré-Sal Petróleo filled the Union's coffers in 2020 with a contribution of BRL 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 power generation and other needs. The acquisition also expands the company's LNG import terminals to nine of five that are either operational or under development, particularly in Brazil, which should drive 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 world's 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-moving Brazilian market. With GMLP, we gain world-class LNG vessels and operators that are ideally suited to support our existing terminals and robust pipelines.”
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Gas and power projects in Brazil
From Hygo, NFE would acquire an operational FSRU vessel and a 50% stake in a 1.500 MW power plant in Sergipe, in addition to 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 the Hilli Episeyo, a floating liquefaction vessel.
The merger deals would give the company a foothold in Brazil, where natural gas power is primarily used as a backup for hydroelectric dams 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 shares of Class A common stock and $580 million for all outstanding shares of Hygo. The Hygo deal has an enterprise value of US$3,1 billion and an equity value of US$2,18 billion. NFE also agreed to acquire GMLP common stock for $3,55/each, a deal with an enterprise value of $1,9 billion and $251 million book value. Divestment of Hygo and GMLP would reduce the fleet under the umbrella of Golar LNG Ltd. by about half.
Hygo's board of directors and shareholders approved the acquisition. GMLP's board also approved the transaction, which is subject to shareholder approval. The forecast is that the transactions will be completed by the end of June.
NFE's expansion into the liquefied natural gas - LNG market
Golar companies are pioneers in floating liquefaction technologies. NFE went public last year and has continued to transition to an operating company. NFE operates or is developing small-scale LNG assets around the world, including import terminals, fuel management facilities, regasification infrastructure, gas plants and medium-term 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 that develops hydrogen production technology. Through a new division called Zero, it also partnered on a gas-fired power plant project in Ohio that would blend hydrogen to produce electricity.
NFE shares “our vision of providing cheaper, cleaner energy to 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 world-leading energy transition company that goal will benefit from being part of the future.”
