New Fortress Energy Inc. has reached agreement on contract terms with the Third-Party Procurement Office (3PPO) and the Puerto Rico Public-Private Partnerships Authority (P3A) for the long-term supply of LNG to Puerto Rico. The contract is currently under review for approval by the Financial Oversight and Management Board of Puerto Rico (FOMB).
The gas supply agreement (GSA) will provide a reliable and affordable supply of natural gas to Puerto Rico’s power system for a term of 7 years. This long-term arrangement will support Puerto Rico’s efforts to replace expensive, higher-emission liquid fuels with cleaner natural gas, delivering significant savings to Puerto Rican ratepayers in the process.
“We have had discussions on long term fuel supply since April with the Government of Puerto Rico and are pleased to have reached an agreement,” said Wes Edens, Chairman and CEO of New Fortress Energy. “This landmark agreement provides two critical benefits to the island. First, it establishes security of supply in San Juan for the next 7 years for power plants currently running on LNG. Second, it provides for incremental LNG volumes to be delivered, allowing for the conversion of additional gas ready plants currently burning diesel, resulting in hundreds of millions of dollars in energy savings for Puerto Ricans.”
Up to 75 trillion Btu of natural gas per year can be supplied through the GSA, with minimum annual take-or-pay volumes of 40 trillion Btu, increasing to up to 50 trillion Btu if certain conditions are met.
Pricing of the volumes supplied through the GSA is set at a blend of 115% of Henry Hub plus US$7.95/million Btu, excluding natural gas supplied to the units at San Juan 5 & 6 (which has historically consumed ~20 trillion Btu/y). Instead, these volumes are priced at 115% of Henry Hub plus US$6.50/million Btu.
The volumes under the GSA are expected to be supplied by LNG produced from NFE’s 1.4 million tpy Fast LNG facility located offshore Altamira, Mexico. The Fast LNG facility achieved COD in 4Q24 and is currently producing LNG at a rate above name plate capacity consistently.
“Matching our LNG production with long term offtake has always been our goal. This locks in sustainable long-term margins for NFE and provides a foundation of financial stability for our company,” added Chris Guinta, CFO of New Fortress Energy.
“This is a milestone agreement for NFE and the government of Puerto Rico. Puerto Ricans pay far too much for electricity today and this long-term agreement provides cheaper and cleaner fuel for existing power plants for years to come,” concluded Edens. “This contract complements our existing long term 25-year supply contract with Energiza and the new 550 MW power plant they are developing. We believe the development of new, efficient gas fired generation is the path to long term affordable and reliable power for Puerto Rico. NFE is excited for this next step in modernising the fuel infrastructure of Puerto Rico and is proud to continue building on our longstanding partnership with Governor González-Colón and the Government of Puerto Rico.”