Floating regasification and storage unit specialist Excelerate Energy is weighing up whether to order a second FSRU newbuilding.
Answering questions in a second-quarter results briefing, executive vice president and chief financial officer Dana Armstrong said the company is focused on growing the business and using its capital to fund this.
“We are considering potentially placing an order for a second newbuild to fund additional growth so that’s really where are priorities are at this time,” she said.
Excelerate, which currently operates a fleet of 10 FSRUs, contracted a single 170,000-cbm FSRU at Hyundai Heavy Industries in October 2022 priced at $337m. The newbuilding is due for delivery in June 2026.
Armstrong said Excelerate will be working on the financing around this.
The company is believed to be holding an option for a second unit at the shipyard.
Steven Kobos, president and chief executive of Excelerate, said the company is focused on optimising its FSRU fleet and evaluating strategic investments and new assets and infrastructure to further the organisation’s growth.
He said the sustained tightness of the FSRU market should create new opportunities for Excelerate to connect LNG to downstream customers.
“We plan to invest in additional FSRUs and LNG infrastructure that will position the company to expand our presence in markets with a growing demand for LNG,” Kobos said.
He said this includes regions such as sub-Saharan Africa and countries like India, Pakistan, Vietnam and Bangladesh.
Kobos updated on the company’s Payra LNG project in Bangladesh for which Excelerate has signed a non-binding term sheet with Petrobangla.
He said the project comprises an offshore regas terminal connected to Khulna, Bangladesh’s third largest city, by a 270-kilometre, 1bn-cubic-feet-per-day-capacity onshore pipeline.
Kobos said Excelerate is bullish on the FSRU asset class.
He said markets can use them in different ways such as for seasonal work or for baseload supply while others may require a floating storage unit in combination with shore-based regas or a breakbulk facility.
Kobos also spoke about redeploying assets seasonally that are on term contracts with customers. Asked by analysts as to whether this was an option for Excelerate’s 150,900-cbm Express (built 2009), which is on a rolling contract with Abu Dhabi’s Adnoc, he said the company had “borrowed” the unit previously.
“You can be sure that we are having those discussions with Adnoc, as we are with all our customers,” Adnoc said.
Kobos talked up two recent deals announced by the company.
On the recent charter of its 173,467-cbm FSRU Sequoia (built 2020) to Brazilian energy giant Petrobras, Armstrong said this is the most profitable time-charter party that Excelerate has in its portfolio.
In October, Excelerate inked a 10-year time charter on this FSRU under a fixed fee contract, which starts on 1 January 2024. Armstrong said the deal is linked to the Consumer Price Index every two years.
The vessel will be located at the Bahia Regasification Terminal in Salvador, Bahia, Brazil.
Kobos said this type of term-charter deal gives Excelerate long-term visibility on its earnings to enable the company to pursue its growth strategy.
