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Hoegh LNG to go private

PROJECTS & NORWEGIAN shipowner Leif Hoegh & Co. & Power Infrastructure (GEPIF) to acquire all
COMPANIES revealed on March 8 it had teamed up with Mor- publicly held shares in LNG carrier GasLog in
gan Stanley Infrastructure Partners to take Nor- February.
way-based FSRU provider Hoegh LNG private. The shipping industry is poised for consol-
Leif Hoegh and Morgan Stanley have formed idation following a collapse in world trade last
a 50:50 joint venture, Larus Holding, to buy the year as a result of the pandemic. LNG trade was
remaining 50.4% interest in Hoegh LNG, whose particularly badly affected, with reduced import
board has recommended that shareholders demand causing shipping day rates to plummet.
approve the offer. The deal will need the backing Hoegh LNG has a fleet of 10 FSRUs and two
of two thirds of Hoegh LNG shareholders to go LNG carriers, and recently launched a new clean
ahead. energy business to focus on supplying green
Key shareholder and bondholder meetings hydrogen and ammonia. It is also exploring
are scheduled to take place in March, and Leif options to develop floating carbon, capture and
Hoegh and Morgan Stanley hope to close the storage (CCS) solutions.
deal in the first half of the year. They will abandon The company held an initial public offering
the deal if it has not moved forward by August 9. (IPO) in 2011 that generated $132mn. Its share
The offer represents a 36% premium to price peaked in 2015 at €14.45 ($17.10) in 2015,
Hoegh LNG’s trading price on March and a but is currently at only €2.38, highlighting the
32% premium to the 30-day average, valuing the pandemic’s impact on its investment case. The
company at a total of NOK1.82bn ($211mn). It remaining 49.6% stake in the company is already
follows a move by BlackRock’s Global Energy held by Leif Hoegh.™

Russia proposes small-

scale LNG incentives

POLICY RUSSIA’S Ministry of Energy has proposed produces gas piston engines, absorption refrig-
more incentives to spur development in the erators and isothermal tanks for cryogenic prod-
small-scale domestic LNG sector, sources told ucts itself.
Moscow-based business newspaper Vedomosti Russia is keen to develop the market for gas
on March 5. as a vehicle fuel, given its lower cost and environ-
The ministry has proposed applying zero mental benefits versus conventional motor fuels.
import duty on overseas-produced equipment The government has already rolled out a number
needed for small-scale liquefaction plants, and of subsidies in recent years to encourage motor-
for vehicles that run on the super-cooled fuel, ists to convert their cars to run on the fuel. The
a source told Vedomosti. The concession will government covers 60% of the cost of converting
only be active for three to four years, after which a vehicle to operate using gas, and state-owned
period it is hoped that Russia will have devel- Gazprom has agreed to bear a further 30% of the
oped this equipment itself, forgoing the need for bill, leaving the owner responsible for only 10%.
imports. For cars and light transport, compressed nat-
Russian enterprises are already capable ural gas (CNG) is seen as the more cost-effective
of producing the bulk of technical products option, whereas LNG is seen as a better solution
needed for small-scale LNG, although there are for heavier, long-haul transport and small-scale
still some items that must be sought out over- power generation and industrial uses.
seas. The ministry has called for an end to duties While Gazprom is the dominant player in
on imports of quick couplings, pipeline fittings small-scale LNG, rival Novatek last August
for cryogenic units and magnetic materials, for launched its own mini-liquefaction plant in
example. Duties currently amount to 15% of Magnitogorsk in the Chelyabinsk region, for
the customs value. In contrast, Russia already serving a network of filling stations in the area.™

Week 10 12•March•2021 www. NEWSBASE .com P13