New Fortress Energy facing bankruptcy
Earlier this year, the Institute for Energy Economics and Financial Analysis identified the company as one of the greatest threats to the growth of renewable energy in Puerto Rico.
This week, New Fortress Energy notified its investors that the company’s position as a going concern is at risk. The company has major holdings in Puerto Rico, which could create more problems for the island’s financial future.
Earlier this year, the Institute for Energy Economics and Financial Analysis (IEEFA) identified New Fortress as one of the greatest threats to the growth of renewable energy in Puerto Rico. The company’s constant moves to convert existing plants to gas and build more natural gas infrastructure on the island are undermining the statutory and regulatory requirements to increase solar energy in Puerto Rico as a tool to improve reliability, reduce budget deficits and safeguard future energy security.
In 2022, IEEFA published a broader ranging report strongly suggesting that New Fortress Energy’s business model was unlikely to succeed.
The company, a purported leader of the LNG global growth bubble, is now bursting. The implications of this potential bankruptcy for the oversupply in global natural gas may be the tip of the iceberg. New Fortress’ holdings during its short but tumultuous history have touched Sri Lanka, Jamaica, Trinidad, Mexico, Netherlands, Jordan, Indonesia, Nicaragua, Brazil, Ireland and in the United States – Florida, Pennsylvania, New Jersey and Puerto Rico.
The implications of this failure are considerable and raise many questions. Will the markets see this as an isolated event or just evidence of one more link in the long chain of weakening financial benchmarks that engulf the fossil fuel sector? (The sector continues to lag the market, near last place in 2024).
Will the countries that have entanglements with New Fortress Energy be able to extricate themselves from this flawed company? Will investors see in this latest revelation grounds to bring a class action suit?
There is more to come from New Fortress Energy, but one thing that is clear is it will leave more financial woes for Puerto Rico.
Author Tom Sanzillo is the director of financial analysis for the Institute for Energy Economics and Financial Analysis (IEEFA.) He has produced influential studies on the oil, gas, petrochemical and coal sectors in the U.S. and internationally, including company and credit analyses, facility development, oil and gas reserves, stock and commodity market analysis, and public and private financial structures. Comments to [email protected].
I would like to see a disclosure that the author is not invested in the company in question directly or as a consultant to others that may be able to profit from the company’s demise or success.