Puerto Rico has temporarily shut most of the power generators on the island after not receiving an LNG shipment from New Fortress Energy amid a weeks-long dispute over supply contracts.
Puerto Rico’s power grid has been strained as-is, and now the shutdown of ten out of the 14 temporary power generating units threatens to lead to outages during the peak summer demand.
U.S. gas supplier New Fortress Energy has canceled an LNG cargo shipment to the U.S. territory in a move described as “unjustified” by Puerto Rico energy czar Josue Colon, who was appointed in January to help tackle the energy crisis on the island.
“We have let them know that this is not acceptable to the government of Puerto Rico,” Colon said on Sunday, as carried by Bloomberg.
Currently, Puerto Rico’s operational power-generating units run on dirtier and more expensive fuel.
The current power supply should be sufficient, but there is little margin for error, according to Colon. Power outages “are a possibility,” added the energy czar, who was appointed by Puerto Rico’s Governor Jenniffer González-Colón after a massive blackout on New Year’s Eve.
New Fortress Energy has said that Puerto Rico owes it millions of dollars for power projects dating back to 2020.
The dispute between Puerto Rico and New Fortress Energy has escalated in recent weeks.
The U.S. territory has extended a deal with New Fortress Energy for LNG supply on a temporary basis, after the supply contract was due to expire last month.
However, the Financial Oversight and Management Board for Puerto Rico last week raised concerns about a plan of the Puerto Rican government to award a 15-year LNG supply deal to New Fortress Energy worth $20 billion. In a letter to energy czar Colon, the Board said such a deal would expose the island “to a monopolistic arrangement that would ultimately jeopardize energy security by committing the people of Puerto Rico to purchase quantities of LNG that significantly exceed the energy system’s current and future capacity.”
Colon said such concerns were overblown as New Fortress Energy already controls one of the island’s few LNG import terminals.
By Tsvetana Paraskova for Oilprice.com
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