Venice Energy picks new FSRU supplier

Venice Energy has completed Stage 1 Enabling works at the Outer Harbour Project in Port Adelaide, Australia, where the project is shovel-ready. There has also been a significant increase in commercial interest and activity around the project – culminating in several key updates.

Origin exclusivity

In October 2023, Venice Energy signed an exclusivity agreement with Origin Energy to enable negotiations on Origin becoming the single user of the LNG import terminal. That agreement will conclude at the end of February.

There was an expectation that a final 10-year terminal user agreement (TUA) would be settled sometime in December 2023 or January 2024.

Venice Energy believed that elements of its negotiations with Origin have been impacted following an announcement by the federal government on proposed changes to domestic gas supply, which has introduced additional uncertainty into the gas market.

The company has planned on continuing to negotiate in good faith with Origin on potential solutions to ensure that enough new gas is delivered to avoid critical shortfalls as a result of rapidly declining domestic production.

Project divestment

Over the course of several months, Venice has been approached by a number of companies to discuss the purchase of the project.

Venice has appointed international M&A specialists CLSA to run a process for interested companies.

To date, 15 companies have expressed their interest in the project and eight have so far registered as part of the due diligence process following the opening of a data room.

Although the requirements of Non-Disclosure Agreements (NDAs) prevent us from naming these companies, I can say they come from a number of different sectors, including existing energy operators, industrial gas consumers, international LNG-specific companies and some private equity players.

FSRU secured

Since December 2023, there has been a new development on the supply of the to the Outer Harbour Project.

Back in mid-2022 Venice signed an FSRU supply agreement (time charter party agreement) with Greek shipping company GasLog. In 2023, GasLog underwent a major restructure and in doing so made the decision to sell-off a number of vessels to others.

In December 2023, AG&P LNG and GAS Entec emerged as a strategic partner to the project to provide the fully converted FSRU. Venice Energy had some good discussions with them over last two months and we have secured a new commercial understanding that guarantees that the project will receive a converted FSRU at an improved cost and in a timely manner.

AG&P is a global player in LNG Terminal Development and more importantly, through GAS Entec, a South Korean firm and industry leader in FSRU conversions, has converted three LNG Carriers into FSRUs, which was integral to the development of the Outer Harbour Project.

The FSRU for the Outer Harbour project shall be fully converted by GAS Entec in a South Korean shipyard.

In February 2024, Venice Energy also met with several other entities to discuss investment in Venice Energy and divestment of the Outer Harbour LNG Project.

Read the article online at: https://www.tanksterminals.com/terminals/21022024/venice-energy-picks-new-fsru-supplier/