A Maersk sale to New Fortress Energy is up to boost the company’s plans on expanding its LNG portfolio; the companies reported this Monday. Maersk sold to New Fortress two drilling rigs, which New Fortress will turn into LNG facilities to save costs.
Firstly, Maersk sold to New Fortress Energy the jack-up drilling rigs of Guardian, and Gallant; the sale will close in June, and was for a total of $31 million for both, as Reuters reports.
Secondly, a spokesperson for New Fortress Energy, told Reuters that the purchases are part of a broader strategy by the company; specifically, to boost its LNG portfolio while saving in costs, by acquiring, converting and reusing existing assets.
Thirdly, according to Reuters, on May 7, during a conference call, New Fortress CEO, Wesley Edens, said that a typical LNG facility takes around 5 years to build; as well as a total average $4 billion investment.
However, converting jack-up rigs to LNG can be done in less time, and with a $500 million investment. Consequently, the wells acquired from Maersk will begin conversion in July, 2022, and bay start commercial production by the end of 2023.
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Converting Maersk rigs will move NFE deeper into LNG
Moreover, as we have reported previously, the LNG market has been growing for the past years; specially as shale gas declines and a ESG agenda becomes more relevant. Nevertheless, LNG has also environmental impacts, and it is struggling with the market in Europe, where governments and stakeholders are advising companies against LNG usage.
Nevertheless, the market is up to grow two times from its current size by 2040. By converting the Maersk rigs into LNG facilities, will quickly move New Fortress deeper into the LNG growing market.
However, New Fortress is aiming countries with underutilized LNG, like Brazil, South East Asia, and Africa; as said by Edens during the conference call, quoted by Reuters. In fact, the company will make its final market decision for that LNG within a two- or three-month period.
Finally, New Fortress has been expanding considerable into the LNG market; last month, it acquired LNG companies Hygo Energy Transition and Golar LNG Partners, for $5,1 billion. Also, its Mexico and Nicaragua LNG terminals will begin operations by the end of June.