New Fortress bursts into Brazil LNG with Golar buy

New Fortress Energy has agreed to acquire Brazilian LNG and power company Hygo Energy Transition from Norway's Golar LNG and US private equity fund Stonepeak Infrastructure Partners, a deal that catapults the New York-based company into the LNG major leagues.

The $2.18bn acquisition gives New York-based New Fortress an expansive presence in Brazil's growing natural gas and power market, and marks its first foray into South America. In a parallel $251mn agreement, Golar LNG agreed to merge with New Fortress.

Hygo's assets in Brazil include a 50pc stake in Centrais Eletricas de Sergipe (Celse), which owns the Porto de Sergipe LNG-to-power complex. The 1.5GW power station is supplied by the Golar Nanook floating storage and regasification unit (FSRU), which has a 26-year contract with Celse.

With the deal, three additional vessels are expected to be deployed to Brazil, including the Golar Mazo LNG carrier (LNGC), which has been slated for Suape port in Pernambuco. Two other LNGCs, the Golar Penguin and Golar Celsius will be converted to FSRUs for deployment to Brazil, according to New Fortress.

The acquisition also includes a 50pc stake in the 605MW Centrais Eletricas Barcarena (Celba) thermoelectric project, which was awarded 25-year power purchase agreements (PPAs) with nine power distributors in an October 2019 auction.

Other projects in Hygo's portfolio include a 15mn m³/d LNG regasification terminal project in Santa Catarina state, which is awaiting final environmental approval to begin construction. And Hygo is building a 100,000 m³/d liquefaction plant in Uruguaiana in Rio Grande do Sul state, which will receive pipeline gas from neighboring Argentina.

An early mover in Brazil's bio-LNG market, Hygo has a deal with local energy firm Zeg to distribute bio-LNG from a landfill in Sao Paulo state. And it is finalizing a tender offer to acquire 5mn m3/d of biogas, which will be transformed into bio-LNG using small-scale liquefaction units.

New Fortress has been eyeing Brazil's LNG-to-power market for several years. In 2017, the company reached an agreement with Bolognesi Energia to acquire its 1.3GW Rio Grande thermoelectric project and LNG regasification terminal, but the deal fell through.

New Fortress has operating LNG terminals in Jamaica, Puerto Rico and two others it deems "under development" in La Paz, Mexico and Puerto Sandino, Nicaragua.