Höegh LNG Partners LP (NYSE: HMLP) on Friday (Sep24) announced that it has entered into an agreement with a subsidiary of New Fortress Energy Inc (New Fortress) to charter the Höegh Gallant for FSRU operations for a period of ten years, with a planned commencement during the fourth quarter of 2021.
The Partnership has further entered into an agreement to suspend the existing charter for the Höegh Gallant with a subsidiary of Höegh LNG Holdings Ltd. (“Höegh LNG”), with effect from the commencement of the New Charter (the “Suspension Agreement”).
The charter rate under the New Charter, in line with the current market, will be lower than under the existing charter for the Höegh Gallant. However, under the Suspension Agreement, Höegh LNG’s subsidiary shall compensate the Partnership monthly for the difference between the charter rate earned under the New Charter and the charter rate earned under the existing charter with the addition of a modest increase until July 31, 2025, the expiry date of the existing charter.
After that, the Partnership will earn the charter rate agreed with New Fortress for the remaining term of the New Charter. In addition, pursuant to the Suspension Agreement, certain capital expenditures incurred to ready and relocate the Höegh Gallant for performance under the New Charter will be shared 50/50 between Höegh LNG and the Partnership, subject to a maximum obligation of the Partnership.
The Board of Directors of the Partnership and the Conflicts Committees (the “Conflicts Committee”) have approved the New Charter and the Suspension Agreement. The Conflicts Committee retained an outside financial advisor and outside legal advisors to assist with its evaluation of the agreements.
Sveinung Støhle, Chief Executive Officer, stated: “The new long-term FSRU contract entered into with New Fortress is an important development for the Partnership as it extends the Partnership’s contract coverage and average charter length and broadens our customer base and global footprint. The Höegh Gallant will serve the Old Harbour facility in Jamaica, where its size and performance will enable New Fortress to further optimize its already highly successful operation.”