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Puerto Rico’s Proposed Pivot to Natural Gas Stalls

August 07, 2017

Wall Street Journal:

A $380 million offshore gas project in Puerto Rico is stalling, caught up in the fallout from a $9 billion utility bankruptcy.

Excelerate Energy LP gave notice last week it had canceled contracts with Puerto Rico’s electric utility to construct a floating natural gas terminal off the island’s southern coast. The cancellations weren’t widely known until Wednesday, when local energy regulators demanded an explanation from the public utility known as Prepa.

The planned Aguirre Offshore GasPort project, or AOGP, was designed to import cheap natural gas, helping to wean Puerto Rico’s electric utility off dirtier sources of fuel. Now the project’s timetable is in doubt over Prepa’s deteriorating financial condition and the open-ended process of reordering its liabilities, according to people familiar with the matter. Federal financial oversight officials placed the utility under bankruptcy protection last month, heightening the likelihood of losses to debtholders owed $9 billion.

The contract cancellations underscore how Prepa’s operations are likely to be disrupted from the unprecedented bankruptcy, which is unfolding under an untested federal rescue package written specifically for Puerto Rico. The original contract terms, signed in 2014, “did not account for the uncertainty that has resulted,” an Excelerate spokeswoman said.

More: ($) Puerto Rico Gasport Project Stalls Over Utility Bankruptcy

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