Puerto Rico has negotiated a $4 billion liquefied natural gas contract with New Fortress Energy, Governor Jenniffer Gonzalez said on Tuesday in a post on social media.
The supply deal, which comes after talks for a much larger contract broke down in July, reduced the term to seven years from 15 years – with the option to extend for an additional three years – and also eliminated exclusivity clauses.
Gonzalez said prices for the LNG cargoes were more competitive, with some premiums reduced.
“This agreement contributes to the process of Puerto Rico’s energy transition, reducing dependence on more polluting fossil fuels,” said Josue Colon, who was appointed to oversee the territory’s energy sector earlier this year.
The agreement is now pending approval by Puerto Rico’s Financial Oversight and Management Board.
New Fortress Energy, whose shares rose 45% in Tuesday trading, said in a separate statement that the long-term LNG supply for Puerto Rico’s power system could reach up to 75 trillion British Thermal Units (TBtu) per year, with a minimum annual take-or-pay volume of 40 TBtu.
NFE expects to ship the LNG from a floating facility that began turning U.S. natural gas into LNG in Altamira, Mexico, last year. The volumes will be priced at 115% of benchmark Henry Hub prices, plus an additional $6.50 or $7.95 per million Btu.
“Puerto Ricans pay far too much for electricity today and this long-term agreement provides cheaper and cleaner fuel for existing power plants for years to come,” NFE’s CEO Wes Edens said.
(Reporting by Nathan Crooks in Houston; Editing by Marianna Parraga and Nia Williams)