Höegh LNG Settles USD 23.7 Mn LNG Boil-Off Dispute with Total
Norwegian shipowner Höegh LNG has reached a commercial agreement with French energy major Total to settle the boil-off dispute regarding Neptune and Cape Ann, the two LNG regasification vessels.
As informed, the boil-off claim will be settled for an aggregate amount of USD 23.7 million and paid in installments during 2020.
“The settlement amount, which will be paid by the two joint venture companies owning the vessels, is in line with the provision made in 2017 and is subject to executing final binding agreements between the parties,” Höegh LNG explained.
Höegh LNG Holdings will indemnify Höegh LNG Partners for its 50% share of the settlement amount.
Under the Neptune and the Cape Ann time charters, the joint ventures failed to ensure that the vessels meet specified performance standards during the term of the time charters. The performance standards include the vessels not exceeding a maximum average daily boil-off of LNG.
The dispute settlement was announced in the company’s financial report for the quarter and year ended December 31, 2020.
In the fourth quarter of 2019, Höegh LNG recorded a net profit after tax of USD 4 million, up from USD 3.2 million in the preceding quarter and down from USD 45 million seen in Q4 2018.
Total income for Q4 2019 stood at USD 94.2 million, compared to USD 82.2 million in the previous quarter. As explained, the increase reflects the first full quarter of operations for Höegh Galleon, a higher spot rate achieved for Höegh Giant in the fourth quarter and operation of Höegh Esperanza in FSRU mode for approximately half the quarter.
For the full year ended December 31, 2019, net profit fell to USD 8 million from USD 72 million posted a year earlier.
In 2019, total revenues also dropped to USD 336.1 million from USD 352.7 million reported in 2018. The decrease is mainly caused by USD 40.2 million one-off revenue recognition of remaining contractual commitments from Egas under the amended contract structure implemented in Q4 2018, which is partly offset by higher revenues from a larger operated fleet in 2019 compared with 2018, according to the company.
During January 2020 Höegh LNG raised NOK 650 million (USD 69 million) in a new unsecured bond loan with a five-year tenor. Together with the previously announced USD 80 million revolving credit facility secured by the company’s common units in Höegh LNG Partners, the new bond loan will be used to refinance the HLNG 02 bond loan maturing in June 2020 and for general corporate purposes.
In addition, Höegh LNG said it is is making good progress with the refinancing of the Independence debt facility’s commercial tranche (USD 61 million), maturing in May 2020.
As informed, the coronavirus outbreak has not had any direct effect on the company’s revenues nor operations, including its FSRU in Tianjin, China, which continues to perform according to contract.
In mid-November 2019, Höegh Esperanza completed its season in LNGC mode and returned to the Tianjin LNG terminal in China to resume FSRU operation.
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