Gov’t officials: LNG deal with NFE will lower energy prices

The Financial Oversight and Management Board approved the new liquefied natural gas supply agreement, which completely replaces the original proposal submitted by New Fortress Energy earlier this year. La Fortaleza officials said the new deal will significantly reduce energy costs, shorten the contract’s duration, and deliver savings that benefit customers.

By THE STAR STAFF

La Fortaleza Chief of Staff Francisco Domenech, along with Energy Czar Josué Colón Ortiz, gave assurances on Tuesday that the new liquefied natural gas (LNG) supply contract with New Fortress Energy (NFE) will lower energy prices.

The Financial Oversight and Management Board approved the agreement, which completely replaces the original proposal submitted by NFE in mid-2025. Gov. Jenniffer González Colón’s administration rejected the initial plan -- valued at over $20 billion, with a 15-year term and exclusivity clauses -- and negotiated a new deal it says is aligned with Puerto Rico’s energy policy. The new agreement will significantly reduce energy costs, shorten the contract’s duration, and deliver savings that benefit customers, the officials said.

“This agreement is the result of months of rigorous technical work,” said Colón Ortiz, who also serves as executive director of the Public-Private Partnerships Authority. “We demanded better terms, stronger guarantees, and fair costs. Puerto Rico deserves a stable, reliable, and economically sustainable energy system, and this brings us closer to that goal.”

The new contract has a base term of seven years, with an option for three more, cutting the duration by more than half. Its estimated cost is about $4 billion -- $16 billion less than the previous proposal. The government also negotiated substantial reductions in charges. Temporary units were reduced from $10.29 to $7.95 per unit, a 22% decrease, while San Juan units 5 and 6 remain at $6.50, consistent with 2019 contract rates. Those changes will save over $54 million annually, the officials said, and more than $375 million over the contract term, directly lowering customer bills.

The agreement also removes exclusivity, allowing Puerto Rico to diversify natural gas suppliers and ensure continuity if NFE fails to deliver. Stronger legal protections guarantee the government’s right to use critical infrastructure -- even in cases of bankruptcy -- reducing litigation risks and ensuring operational stability, the officials noted.

If NFE cannot supply gas, Puerto Rico can use the San Juan terminal under a tolling agreement of $0.50/MMBtu, ensuring uninterrupted operations.

“This agreement positions us for a transition to a modern, resilient energy system aligned with Puerto Rico’s strategic interests,” Colón Ortiz emphasized. “It’s a key step toward system stability.”

However, the contract says the conditions of the original contract have not changed from July 2025. Global LNG prices are typically benchmarked against indices such as the US Henry Hub price or the Asian JKM spot price. In July 2025, the Henry Hub natural gas spot price ranged from around $3.12 to $3.60 per MMBtu. The price formula provided shows that the price Puerto Rico will pay is approximately $4.76 per MMBtu, according to calculations done by the STAR.