Norway’s Höegh LNG Holdings has decided to put all FLNG activities on hold to concentrate on its core business of FSRUs.
In an announcement, Höegh says that it sees the highest return on investment and most promising market prospects in the FSRU segment.
Höegh says the oversupplied LNG market and deteriorating energy and financial markets are behind the decision, with the FLNG likely to remain challenging for the foreseeable future. The company sees market conditions for FSRUs much more favourable, driven by the strong growth in new LNG supplies at very competitive prices.
Sveinung J.S. Støhle, president & CEO of Höegh LNG, commented: “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.”
The company will complete its obligations towards existing FLNG customers, and FLNG employees will be transferred to the FSRU business.
Höegh has also impaired the book value of its FLNG assets to the tune of $37m for the fourth quarter of 2015. However, the company did say it would lead to a reduction in annual net SG&A expenses of around $3m going forward.