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LNG Companies Invest in Small-Scale Specialist

Credit: Golar
Credit: Golar

By MarEx 2018-10-01 18:21:19

Höegh LNG, Golar LNG and Stolt-Nielsen have jointly invested in a small-scale LNG company that will undertake the delivery of LNG to areas of stranded demand, the development of LNG bunkering services and supply to the transportation sector.

The companies have made a combined investment commitment of $182 million in Avenir LNG Ltd. The investment will be contributed as cash and equity-in-kind and will fund the construction of six small-scale LNG carriers, a small-scale storage terminal and regasification facilities. Höegh LNG and Golar LNG have each committed $24.75 million to the company. 

Avenir LNG was formed by Stolt-Nielsen in 2017 to provide LNG to markets lacking access to natural gas pipelines. With the joint investment, Stolt-Nielsen will consolidate all its LNG activities into Avenir, including four LNG new buildings on order at Keppel Singmarine in Nantong, China and the joint-venture LNG terminal and distribution facility to be constructed in the port of Oristano, Sardinia. Avenir plans to source and ship LNG to the terminal using small LNG carriers and to distribute the LNG in trucks and through regasification into local network grids. In addition, Avenir plans to order two further small-scale LNG carriers.

The market for small-scale LNG is rapidly expanding, and the forthcoming IMO 2020 regulations is one of many driving factors for increased small-scale LNG consumption, and Avenir LNG plans to introduce safe and efficient ship-to-ship bunkering services at key strategic ports to meet and develop demand for LNG as a marine fuel.

Höegh LNG and Golar LNG will each hold an initial share of 25 percent of Avenir LNG, while Stolt-Nielsen will remain the largest shareholder with ownership of 50 percent. Subsequent to the initial capital raise, Avenir LNG will contemplate a public listing at the Oslo Over-The-Counter market during 2018.

Höegh LNG President and CEO Sveinung J.S. Støhle commented: “Due to the size and location of our FSRU fleet, Höegh LNG has for some time seen small-scale LNG services as an attractive complement to our core offering of full-scale FSRUs. We have evaluated a range of opportunities to establish a strong competitive position in this growing market, and to this end, we are pleased to be partnering with Stolt-Nielsen and Golar LNG to create a market leader in Avenir LNG. The investment provides Höegh LNG with an opportunity to enter the segment through a venture that is at an advanced stage of development. It represents a highly attractive opportunity for growth and has direct synergies with our core full-scale FSRU business through the incremental LNG demand it is expected to deliver.” 

Iain Ross, Chief Executive Officer of Golar LNG, said, "Small scale LNG transportation and distribution represents an exciting new market with significant growth prospects. Avenir is the right vehicle for this market entry and its formation builds on the teaming agreement signed with Stolt-Nielsen in June 2015. The addition of Höegh LNG will allow Avenir to create a business with the experience and scale to tackle all aspects of small scale LNG."