OSLO, Norway – Höegh LNG Holdings Ltd. has announced that it will put all FLNG activities on hold in order to allocate all resources and capital to its core business of floating storage and regasification units (FSRU).
The company said that the FSRU segment is where it sees the highest return on invested capital and the most promising market prospects.
It said its decision is a consequence of “the oversupplied LNG market and deteriorating energy and financial markets, which mean that investment decisions for new LNG production facilities, including the FLNG segment, will continue to be challenging for the foreseeable future.”
However, Höegh said the market conditions for FSRUs continue to be favorable, driven by the strong growth in new LNG supplies at very competitive prices. It sees a high level of project activity for new FSRU projects, promoted by both LNG producers as well as LNG importers and downstream gas consumers.
The company will not engage in new FLNG developments, however, it said it will complete its obligations toward existing FLNG customers. All FLNG employees will be transferred to the FSRU business. The company has consequently decided to impair the book value of its FLNG assets for an amount of $37 million in 4Q 2015. These intangible assets are substantially all related to the offshore FLNG FPSO front-end engineering and design study that the company completed in 2009, prior to the IPO in 2011.
President and CEO Sveinung J.S. Støhle said: “Given the overall market outlook for LNG and the current state of the financial markets, we believe focusing solely on FSRUs is financially and commercially the best strategy for Höegh LNG. We are fully committed to build on our position as the leading FSRU provider, and will take this opportunity to sharpen our focus and strengthen our FSRU team to ensure that we reach our ambition of growing our fleet to 12 FSRUs by 2019.”
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