Höegh LNG said it has decided to amend the Höegh Gallant FSRU time charter with Egypt Natural Gas Holdings Company (EGAS).
Under the amended contract, the Höegh Gallant will be chartered as an LNG carrier to a third party, and EGAS will compensate for the rate difference between the original FSRU contract and the new LNG carrier time charter, Höegh LNG said in a statement.
The amended contract is expected to become effective in October 2018 and will run to April 2020, the termination date of the original five-year FSRU contract.
As part of the original FSRU contract with Egas, Höegh LNG has certain equipment installed on the jetty in Ain Sokhna, Egypt. The book value of this equipment was approximately $9 million as of June 30, 2018, and since the market value and alternative use of such equipment is unclear, Höegh LNG expects to record an impairment for a corresponding amount for the third quarter of 2018.
The FSRU was deployed in 2015 when Egypt looked to cover the rising domestic demand for natural gas with LNG imports.
However, with recent discoveries such as the giant Zohr gas field, Egypt’s domestic production kept rising, eventually resulting in the country halting LNG imports last month as it was reported earlier.