New Fortress Energy agreed contract terms with local authorities to continue delivering natural gas for Puerto Rico's power system for seven more years.
Wes Edens, NFE’s chair and CEO, highlighted the two key benefits of this agreement for Puerto Rico: "First, it establishes security of supply in San Juan for the next seven years for power plants currently running on LNG. Second, it provides for incremental LNG volumes to be delivered, allowing for the conversion of additional gas-ready plants currently burning diesel, resulting in hundreds of millions of dollars in energy savings for Puerto Ricans."
Edens also pointed out that Puerto Ricans currently face high electricity costs, and this long-term contract will provide cheaper and cleaner fuel for the island’s existing power plants. The agreement is a continuation of NFE’s ongoing discussions with the Puerto Rican government, which began in April.
The gas supplied under this new agreement is priced at a blend of 115 percent of Henry Hub prices plus $7.95 per million British thermal units (MMBtu), with the exception of the volumes delivered to the San Juan 5 & 6 plants. These volumes, which historically consume approximately 20 TBtu annually, are priced at 115 percent of Henry Hub plus $6.50/MMBtu.
NFE plans to source the LNG under the new agreement from its Fast LNG facility in Altamira, Mexico. This facility, with a capacity of 1.4 million metric tons per annum, began operations in the fourth quarter of 2024. The company views this agreement as a key step in aligning its LNG production with long-term offtake, ensuring sustainable long-term margins and financial stability for NFE, according to Chris Guinta, NFE’s CFO.
This contract complements NFE's existing long-term 25-year supply agreement with Energiza for a new 550-megawatt power plant being developed. NFE’s continued partnership with Puerto Rico has evolved over time, with the company previously selling emergency power plants to the Puerto Rico Electric Power Authority (PREPA) in 2023 for $373 million.
Additionally, the U.S. Department of Energy (DOE) recently extended emergency orders that ensure Puerto Rico has enough power capacity and secure transmission lines, though full recovery of the island's grid will take years, following decades of deferred maintenance, hurricanes, and earthquakes. The DOE's critical work to improve grid reliability continues as part of ongoing recovery efforts.
