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Höegh LNG signs revised FSRU agreement with PGN

LNG Industry,

Höegh LNG and PGN have revised the FSRU agreement between them because the location of the FSRU has changed. At the request of the Indonesian Government, PGN had decided to change the location of the FSRU from offshore Belawan to offshore Labuhan Maringgai, in the Lampung province, at the south east coast of Sumatra, Indonesia. 

Höegh LNG will provide the FSRU under construction at Hyundai Heavy Industries in South Korea as previously agreed, with modifications as required by PGN. The agreement is as before for a firm 20 year charter with two five year options to extend for a total period of 30 years. The EBITDA contribution from the FSRU lease is approximately US$ 40 million per year for the firm 20 year period. 

As under the initial agreement, the mooring system will be paid for and built by Höegh LNG, but under the new agreement, PGN will take title to and reimburse Höegh LNG for the full investment of the mooring system, including financing cost, upon completion. This means that from start-up, Höegh LNG's investment is solely the FSRU itself. Due to the change of location and the new mooring system, the planned start-up date has been moved to June 2014, and Höegh LNG will receive full compensation for the delayed start-up. 

President and Chief Executive Officer, Sveinung Støhle, said, "We are very pleased to have agreed the revised terms for the move of PGN's floating LNG import terminal project from North Sumatra to Lampung. The ability to apply the FSRU at a different terminal location is evidence of the flexibility and value these solutions bring to our customers. We are looking forward to working with PGN to complete its first FSRU project, utilising our initial newbuilding at Hyundai Heavy Industries in South Korea."

Adapted from press release by Peter Farrell.

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