The multi-year agreement reached with New Fortress Energy (NFE) for the supply of liquefied natural gas (LNG) will allow, in the future and in certain scenarios, other companies to deliver fuel through the terminal that, through a lease, the gas company will manage until 2038, according to a press release from La Fortaleza.

The estimated amount of the seven-year contract-with an option to extend for an additional three years-amounts to $4 billion, an 80% reduction from the $20 billion the previous 15-year deal was projected to represent, which the Fiscal Oversight Board (FOSB) rejected in July.

According to Governor Jenniffer González, the new version of the supply contract, which must pass the JSF’s sieve, eliminated “exclusivity” clauses contained in the previous agreement.

At the conclusion of discussions between NFE and the Independent Procurement Office (3PPO)-which handled the negotiations on behalf of the Autoridad para las Alianzas Público Privadas (AAPP) -, it was established that other suppliers will be able to access the terminal that the gas company controls in the San Juan Bay, at a cost of 50 cents per million British thermal units (MMBtu), “in the event that NFE cannot deliver natural gas”.

According to the governor’s press release, this is an amount “that compares with these costs in similar terminals in the nation (United States)."

The terminal that NFE operates adjacent to the San Juan plant is the only one where LNG is regasified on the north coast, and its access to other fuel companies was one of the high points of the negotiations between the conglomerate and the 3PPO.

In objecting to the previous version of the contract in July, the JSF said it gave NFE unrealistic fuel consumption guarantees, putting the government at risk of making payments for LNG that the generation fleet would not need, since it is uncertain how many production units will be modified in the coming years to run on natural gas. The contract submitted to the JSF reduced from 100 to 75 MMBtu the annual contracted quantities and from 70 to 40 MMBtu the minimum purchase guarantee to NFE, said La Fortaleza.

For NFE, the closing of the multi-year pact in Puerto Rico is one of the crucial points for the investment market, after its shares lost more than 95% of their value since 2024 and it began to prepare to negotiate with its creditors.

“With the protection of the people’s interests at the forefront, today we announce that, after an exhaustive negotiation process, we were able to substantially modify the agreement with NFE, which provides marked savings to the treasury and greater protections to the people,” said González.

“We recognize that challenges associated with NFE’s financial situation persist, but the new contractual framework puts Puerto Rico in a better position to balance natural gas accessibility, fiscal prudence and energy security," said Secretary of the Interior, Francisco Domenech.

The statement, however, does not specify how many plants in the fleet managed by Genera PR - a subsidiary of NFE- will receive the LNG, beyond units #5 and #6 at the San Juan plant and the 14 temporary units at that facility and the Palo Seco plant (Toa Baja). The first agreement provided that, in the future, NFE would supply fuel to all generation facilities, with the exception of the Mayagüez plant.

La Fortaleza assured, instead, that the agreement would result in savings of $50 million annually, by reducing $10.29 to $7.95 the “adder” (margin) that NFE will charge for each MMBtu of fuel for the temporary units and maintaining at $6.50 the “adder” for the combined cycle units #5 and #6, the price that has been in effect since their gasification in 2021.

“The use of natural gas as a transition fuel, in addition to representing substantial savings compared to ‘Bunker C’ and diesel, allows improving efficiency in electricity generation, reduces emissions and maintenance and operating costs, while moving towards a more sustainable energy future and aligned with the resilience goals of the electricity system,” said, in the press release, the zar de Energía and executive director of the AAPP, Josué Colón.

In an interview with El Nuevo Día before the conclusion of the negotiations with NFE became known, Colón stressed that the FSB has reiterated to the government that it has the authority to evaluate and approve the contract despite having - since the beginning of August - six vacancies among its seven chairs.

“The information we have is that yes, they can process matters related to contracts that are brought to their attention. In that sense, at least the representation that the Board has made to us, is that the ordinary functions continue," he indicated.

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This content was translated from Spanish to English using artificial intelligence and was reviewed by an editor before being published.