PERU LNG 2021 Annual Report
ANNUAL REPORT
PERU LNG 2021
CHAPTER 7
FINANCIAL INFORMATION
Executive summary - 2021
During 2021, economic reactivation
throughout the world brought an increase
in the demand for LNG for electricity
generation, thus driving international
prices above those of 2020. The Henry Hub
spot price showed an annualised increase
of 88%, while the rest of the markers, Japan
Korea Marker (JKM), National Balancing
Point (NBP) and Title Transfer Facility
(TTF) recorded an annualised increase
of more than 100 %. This effect on prices
offset PERU LNG's drop in production
caused by events in the plant in the second
and third quarters of the year, resulting in
the company recording an EBITDA of USD
145 million, a figure USD 93 million (178
%) higher than the EBITDA at the end of
2020, which was USD 52 million.
Last year's operating results. were
such that the company recorded its
highest EBITDA since the end of 2018,
substantially improving its ratio of
indebtedness, which dropped from 15.3x
in 2020 to just 6.2x in 2021.
During 2021 total LNG sales were 132.9
TBtus (trillion British Thermal Units),
represented by thirty eight shipments to the
markets of Europe, and Asia. In contrast,
at the close of 2020 the total volume sold
was greater at 204.8 tBtus, represented by
fifty five shipments. The reduction in tBtus
and, therefore, the number of shipments,
was due to events in the plant in the second
and third quarters of the year, relating
to (i) unexpected internal damage to a
compressor turbine, (ii) a controlled but
unplanned stoppage caused by a fault in the
main cryogenic heat exchanger (MCHE) and
(iii) a loss of the plant's mixed refrigerant
(MR). It should be noted that the company
declared these three events as force majeure
under the Gas & Sales Agreement (GSA)
and Sales & Purchase Agreement (SPA),
due to their unexpected nature and the fact
that they were beyond the control of PERU
LNG S.R.L. Furthermore, the company sent
a provisional notification to its insurance
company to cover the first and third events;
at present they are being evaluated by the
loss adjuster appointed by the insurance
company.
Total earnings at the close of 2021
amounted to USD 1,608 million, a figure
252% higher than total earnings in 2020,
which were USD 457 million. This change
can be explained principally by the
global increase in the average LNG price
(explained in previous paragraphs), which
rose from an annual contract average
of USD 2.81 per MMBtu in 2020 to an
annual contract average of USD 12.8 per
MMBtu in 2021. Furthermore, the sales
cost increased by USD 967 million, from
USD 500 million at the close of 2020 to
USD 1,467 million in 2021 due principally
to an increase in the unit cost of the gas
acquired for production.
The adjustment to
Manzanillo
Minimum amounted to USD 109 million in
December 2021, compared with USD 131
million in December 2020, explained by a
reduction in the adjusted annual quantity
(81 tBtus in 2021 compared with 143.1
tBtus in 2020).
At the close of 2021, PERU LNG continued
implementing its two principal projects.
The first seeks to increase the stability
of cargo shipments using infrastructure
that will enable an increased sales volume
of LNG at times when the weather is
unfavourable. The total investment will
be approximately USD 26 million and the
project is expected to be completed in the
second quarter of 2022. As at the 31st of
December 2021, 74% progress had been
made.
The second project seeks to replace
ethylene (the refrigerant currently used
in the liquefaction process) with ethane,
which will optimize the process and
reduce some of the production costs. The
total investment will be approximately
USD 8 million and this project is expected
to be completed in the second quarter of
2022. As at the 31st of December 2021,
93% progress had been made.
Other projects are also planned for 2022,
together with optimization of operating
costs and investments in smaller projects,
provided that the safety and continuity
of plant operations are not affected. It
should be mentioned that it is planned
to shut down the plant in July for a major
programmed maintenance.
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