Norway's Hoegh LNG has reached a "commercial agreement" to settle a long-running boil-off dispute with charterer Total.

The money will be paid by spin-off Hoegh LNG Partners and unnamed joint venture partners that own the 145,130-cbm Neptune (built 2009) and 145,000-dwt Cape Ann (built 2010).

The final amount is in line with the provision of $23.7m made in 2017 and is subject to a binding agreements between the parties.

Hoegh LNG will indemnify Hoegh LNG Partners for its 50% share of the settlement amount.

The charters for the vessel started in 2009 and 2010.

In 2017, Total notified the joint ventures that it was making a claim after it alleged the vessels exceeded the maximum amount of LNG boil-off since the deals began.

The claim was at first $58m, but was reduced to $52m when the arbitration claim was filed.

Hoegh LNG said last year that its 50% share of the claim could be up to $29m.

The tribunal’s determination was received last March, but it did not clarify how an unspecified deduction from the claim should be made, leaving "significant uncertainty" in the evaluation of the potential outcome, Hoegh LNG also said.

Later in 2019, Total served an updated claim submission for $54m, which Hoegh LNG disputed.

Hoegh Gallant coming back

The company also said Hoegh LNG Partners has declared its option to lease back the 170,051-cbm Hoegh Gallant (built 2014) to its parent for about five years from April.

The fourth quarter saw Hoegh LNG log net earnings of $3.9m, against $44.98m in 2018.

Revenue dropped from $94m from $122m.

But chief executive Sveinung Stohle said: "The outlook for our industry is optimistic since global LNG trade continues to grow.

"The competitive LNG price clearly has a positive effect on LNG demand, supporting the demand for additional import facilities, where FSRUs [floating storage and regasification units] have an advantage due to the short time to market."

He added: "Looking forward, we are obviously concerned with the potential effects of the coronavirus outbreak, but this has not had any direct effect on Hoegh LNG's personnel, operations or revenues."

This includes its FSRU in Tianjin, China, which continues to perform according to contract.

"However, it seems clear that the outbreak has already impacted the flow of LNG into the Chinese market, and that this affects the market for LNG carriers, since in recent weeks rates have softened considerably compared to previous levels," the company said.

Fearnley Securities said Ebitda of $60m was ahead of its $58m estimate and in line with consensus.

"Overall a largely neutral report from Hoegh LNG," the investment bank added. "The only remedy is additional FSRU contracts."