New Fortress Energy Signs EPC Contract and Begins Construction of 1.6 GW Power Plant to Serve 15-Year Agreement in Brazil

Rhea-AI Summary

New Fortress Energy (NFE) signs an EPC contract with Mitsubishi Power Americas and Andrade Gutierrez to construct a 1.6 GW power plant in Brazil. The plant will serve a 15-year agreement, providing firm power capacity. Construction is underway, with commercial operations expected by August 2026.

Insights

Energy Sector Analyst

New Fortress Energy's expansion in Brazil with a 1.6 GW power plant kickstarts a significant chapter in the country's energy sector. This development aligns with the global shift towards LNG, a cleaner-burning fossil fuel, to address energy needs and transition goals. The fixed-price EPC contract mitigates cost overrun risks, which is favorable from an investor's standpoint. The 15-year Agreement ensures a long-term revenue stream, potentially stabilizing NFE's financial outlook. Considering NFE's simultaneous development of the Barcarena and Santa Catarina terminals, synergy effects could lead to operational efficiencies and cost savings. This could make NFE a more competitive player in the region, possibly impacting the stock positively. However, the capital expenditure for this project is substantial and investors should monitor the company’s debt levels and cash flow to sustain construction without financial strain.

Environmental and Regulatory Expert

The choice to build an LNG-powered facility is noteworthy in the context of Brazil's energy policy, which is incentivizing cleaner energy sources. LNG is considered a transition fuel, offering lower emissions than coal or oil. NFE's long-term contract with the Brazilian Chamber of Electric Energy Commercialization suggests compliance with regulatory standards and governmental support. From an environmental perspective, the project is a stride towards reducing carbon footprint. Investors should note that regulatory changes or shifts in energy policy could impact project viability. The commitment to a cleaner energy source could enhance NFE's reputation and brand value, potentially appealing to the growing segment of ESG-focused investors.

Construction and Infrastructure Expert

The involvement of Mitsubishi Power Americas and Andrade Gutierrez, both established entities in power plant construction, adds credibility to the project's timely completion. The fixed-price, date-certain EPC contract structure is a strategic move, often employed to manage and lock-in project costs, which can reassure investors about budget adherence. However, the high cost and complexity of such infrastructure projects carry inherent risks like construction delays or technical challenges. Investors would be wise to consider the track record of the consortium in similar projects as a benchmark for execution capability. NFE's confidence in a 24-month completion timeline indicates robust project management, but investors should still account for potential delays typical in large-scale construction.

NEW YORK--(BUSINESS WIRE)-- New Fortress Energy Inc. (NASDAQ: NFE) (“NFE” or the “Company”) today announced that it has finalized and executed an engineering, procurement and construction contract (the “EPC Contract”) with a consortium formed by Mitsubishi Power Americas and Andrade Gutierrez (the “MHI/AG Consortium”) for a 1.6 GW power plant to be built adjacent to the Barcarena LNG terminal. NFE has also issued full Notice to Proceed to the MHI/AG Consortium to begin construction work under the contract. The power plant will provide firm power capacity under the previously announced 15-year Capacity Reserve Contract (“Agreement”) that NFE acquired from Denham Capital and CEIBA Energy, which closed in March 2024.

Under the terms of the fixed-price, date-certain EPC Contract, construction activities for the thermal power plant are already in progress with commercial operations projected to commence no later than August 2026. The power plant will operate under the 15-year Agreement with the Brazilian Chamber of Electric Energy Commercialization.

In Q1 2024, NFE completed construction and commissioning of both the Barcarena and Santa Catarina “TGS” terminals. Along with the existing 630 MW power plant and 25-year agreement, the Barcarena LNG terminal will now host and supply LNG to more than 2,200 MWs of power capacity owned by NFE, as well as supply natural gas to Norsk Hydro’s Alunorte alumina refinery under a 15-year contract which commenced in Q1 2024.

“We are very pleased to announce this EPC Contract and the start of construction for our 1.6 GW power plant in Barcarena. We are grateful to our partners at Mitsubishi Power and Andrade Gutierrez for their swiftness and collaboration in placing this great project into construction and we look forward to finalizing the work over the next 24 months,” said Andrew Dete, Managing Director of New Fortress Energy.

“This 1.6 GW power plant is a historic project for Brazil. It will allow for an efficient energy transition and ensure the reliability of the national electrical system. We are proud to participate together with Andrade Gutierrez to design and construct this important project to support NFE’s growth in Brazil,” said Tim Shore, Senior Vice President of LATAM Commercial and Regional Leader for Mitsubishi Power Americas.

About New Fortress Energy Inc.

New Fortress Energy Inc. (NASDAQ: NFE) is a global energy infrastructure company founded to address energy poverty and accelerate the world’s transition to reliable, affordable, and clean energy. The Company owns and operates natural gas and liquefied natural gas (LNG) infrastructure and an integrated fleet of ships and logistics assets to rapidly deliver turnkey energy solutions to global markets. Collectively, the Company’s assets and operations reinforce global energy security, enable economic growth, enhance environmental stewardship and transform local industries and communities around the world.

Cautionary Language Regarding Forward-Looking Statements

This communication contains forward-looking statements. All statements contained in this communication other than historical information are forward-looking statements that involve known and unknown risks and relate to future events, our future financial performance or our projected business results. You can identify these forward-looking statements by the use of forward-looking words such as “expects,” “may,” “will,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these terms or other comparable words. Forward looking statements include but are not limited to: expectations related to the timing for when our 1.6 GW power plant will commence operations and the supply from the Barcarena LNG terminal.

These forward-looking statements are necessarily estimates based upon current information and involve a number of risks, uncertainties and other factors, many of which are outside of the Company’s control. Actual results or events may differ materially from the results anticipated in these forward-looking statements. Specific factors that could cause actual results to differ from those in the forward-looking statements include, but are not limited to: failure to receive the expected fixed payments under our contracts, unknown and unforeseen risks related to the development, construction or commissioning schedule of the Barcarena power complex, including failure to meet design and engineering specifications, incompatibility of systems, delays and schedule changes, high costs and expenses, and regulatory and legal challenges, among others; failure to receive expected financing on terms acceptable to NFE; receipt of permits, approvals and authorizations from governmental and regulatory agencies on a timely basis or at all; our inability to operationalize our plans for the projects and derive the benefits expected; common risks related to successful integration of the businesses; breach or failure by the parties to comply with the covenants and obligations under the agreements; nonpayment or nonperformance of obligations by the parties; inability to realize the anticipated benefits from the project or our partnerships; adverse regional, national, or international economic conditions, adverse capital market conditions and adverse political developments; business disruption following the transaction; and the impact of public health crises, such as pandemics and epidemics and any related company or government policies and actions to protect the health and safety of individuals or government policies or actions to maintain the functioning of national or global economies and markets. These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of NFE’s forward-looking statements. Other known or unpredictable factors could also have material adverse effects on future results.

Any forward-looking statement speaks only as of the date on which it is made, and we undertake no duty to update or revise these forward-looking statements, even though our situation may change in the future. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in NFE’s annual and quarterly reports filed with the Securities and Exchange Commission, which could cause its actual results to differ materially from those contained in any forward-looking statement.

Source: New Fortress Energy Inc.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240417046636/en/

Investors

Chance Pipitone

ir@newfortressenergy.com

Media

press@newfortressenergy.com

Source: New Fortress Energy Inc.

FAQ

What contract did New Fortress Energy sign?

New Fortress Energy signed an engineering, procurement, and construction contract (EPC Contract) with Mitsubishi Power Americas and Andrade Gutierrez.

What is the capacity of the power plant being constructed?

The power plant being constructed has a capacity of 1.6 GW.

When are the commercial operations of the power plant expected to commence?

Commercial operations of the power plant are projected to commence no later than August 2026.

Who are the partners involved in the construction of the power plant?

The partners involved in the construction of the power plant are Mitsubishi Power Americas and Andrade Gutierrez.

What is the duration of the Capacity Reserve Contract acquired by NFE?

NFE acquired a 15-year Capacity Reserve Contract from Denham Capital and CEIBA Energy.