New Fortress Energy Inc. (NFE) has signed an agreement to acquire 1.6 gigawatts (GW) of power capacity from Ceiba Energy in Brazil, which the United States gas and power utility plans to connect to its existing liquefied natural gas (LNG) infrastructure in the South American country.
In transferring the so-called capacity reserve contract (PPA) to NFE, Denham Capital Management LP subsidiary Ceiba stands to acquire a Series A convertible preferred stake in NFE. NFE will also assume “certain liabilities from a subsidiary of Ceiba Energy” as part of the transaction, NFE said in a recent press release.
NFE plans to fuel the acquired electricity generation capacity with gas from its two LNG terminals in the towns of Barcarena near Brazil’s northern coast and Garuva near the country’s southern coast.
“NFE intends to utilize its existing infrastructure in place in Barcarena to strategically expand its power complex by 1.2 GW, with an expected Commercial Operations Date for the expansion in 2026”, the media statement said. “NFE’s original 630 MW development in Barcarena remains on schedule for COD in the third quarter of 2025”.
“NFE plans to transfer the remaining 0.4 GW of the PPA to another power generation asset that connects to its TGS terminal”, NFE added, noting power customers subscribed to the TGS power capacity of three GW are facing natural gas shortages.
“By using its existing asset base, NFE expects to reduce costs and generate incremental throughput and earnings at its terminals”, the company said.
NFE expects the transaction to close March 2024 and projects cash flows related to the acquisition to start as early as July 2026. “Following customary closing conditions including regulatory approval for the transfer of the PPA in Brazil, the PPA will contribute firm capacity payments of $280 million per annum through its 15-year contract life”, NFE said.
NFE chair and chief executive Wes Edens said in a statement, “We are extremely pleased to expand our business in Brazil and cement NFE as a leading provider of clean, reliable energy to one of the fastest growing economies in the world”.
NFE managing director Andrew Dete added, “With today’s acquisition of the PortoCem PPA, we add a contracted, long-duration asset that is highly complementary to our Brazilian footprint”.
“This aligns with our strategy to vertically integrate and optimize our assets in an effort to drive shareholder value over the long-term”, Dete added.
Ceiba chief executive Emilio Vicens commented, “This transaction will allow the Brazilian power market to benefit from clean capacity reserve consistent with the country’s stated goal of providing reliable power capacity supporting renewable power resources”.
“Importantly as well, the transaction enables Ceiba Energy to continue developing its LNG import energy hub in the State of Ceara”.
Source: Rigzone
