Höegh LNG Partners LP
Q1 2017 Earnings Call Transcript

Published: 24 May 2017

[Operator:]

Good day and welcome to the Hoegh LNG Partners’ Presentation of First Quarter 2017 Results. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Richard Tyrrell. Please go ahead.

[Richard Tyrrell:]

Thank you, Anita. Good morning, ladies and gentlemen, and welcome to the Hoegh LNG Partners first quarter 2017 results call. For the cover page this quarter, and in commemoration of our acquisition of the 51% stake in the Hoegh Grace, I have chosen a shot of the unit in Colombia. There it is on the front page, moored up to a jetty with a pipe running along it that ties it back to the grid. This particular shot shows the first LNG cargo being delivered to the Grace, which is now on contract for at least 10 years and possibly up to 20 years. Next, as ever, please take note of the forward-looking statements on Page 2 and the glossary on Page 3. Turning to Page 4, here there is a summary of the results for the first quarter of 2017. The results reflect the full contribution to the quarter from the Hoegh Grace and continued strong robust cash flow generation from our other long-term fixed-rate contracts. Because the Grace is controlled by HMLP, it is fully consolidated down to the net income line, where the 49% remaining at the HLNG level is taken into account. HMLP reported time charter revenues of $35.1 million for the first quarter 2017 compared to $21.7 million for the first quarter 2016. We generated operating income of $25.7 million for the first quarter 2017 compared to $6.2 million for the first quarter 2016. Reported net income was $16.2 million for the first quarter 2017 compared to a net loss of $1 million for the first quarter 2016. The 2016 quarters were heavily impacted by negative mark-to-market on our swaps in contrast to this quarter, where the swaps had a positive impact. Without the non-cash effects of our long-term interest rate swaps, operating income would have been $23.2 million for the first quarter of 2017, an increase of $8 million from the $15.2 million for the first quarter of 2016. Thanks to the Hoegh Grace, segment EBITDA, which includes EBITDA from the Hoegh Grace and our joint venture vessels on a proportional basis, increased to $29.5 million for the first quarter 2017 from $24.1 million in the first quarter of 2016. In the table below the slide, I've highlighted a number of other reoccurring cash flows that are excluded from segment EBITDA. And we will see these again when looking at the distributable cash flow, and they will have a positive impact when included in your models. As normal, these include the finance lease treatment of the Lampung contract under US GAAP, the non-cash effects of purchase price accounting on the Gallant, and now the Grace and going in the other direction, deferred revenue related to customer-funded modifications on the Neptune. Also receivable as a result of this quarter is a $600,000 indemnity claim that relates to fixing a legacy issue with the regas equipment on the Hoegh Gallant that has been flagged previously. The dashboard on Page 5 provides a graphical illustration of how the quarter compares. The acquisition of the 51% stake in the Hoegh Grace can be seen from the increases in all measures. Segment EBITDA reflects a contribution from the Grace that nets off the 49% stake that remains at the HLNG level on a proportional basis. As we'll see shortly, the Grace performed very much in line with expectations and at a level that equates to an acquisition multiple of below 9.1 times, assuming this quarter is representative. This is possibly lower than some have perceived. Adjusted net income excludes the impact of the swaps. Like the previous quarter, it is weighed down somewhat by tax in Indonesia, the majority of which is non-cash and reimbursable once it becomes payable. Turning to the bottom-left chart, the distributable cash flow increased in the quarter, as of course did the distribution. The resulting coverage ratio was 1.07 times. It would have been higher were it not for the cost of starting up FSRU operations with the Neptune in Turkey and assumptions for cash tax. As disclosed last quarter, these relate to a new thin capitalization rule in Indonesia over which clarification is being sought. Nonetheless, HMLP continues on its impressive growth trajectory since IPO, a period in which it has increased distributions by more than 27%. The distribution chart shows the 4.2% related to the 51% of Grace, and one can envisage the potential acquisition of the remaining 49% enabling a similar increase in distribution. Turning to Page 6, here I reflect on how HMLP's asset base has grown and diversified to include five FSRUs; that is, compared to the three at IPO. Taking the units individually, we did incur some additional costs on a small amount of off-hire on Neptune in the quarter as part of its commissioning in Turkey, but it was still quite an achievement to deliver the project on a highly expedited basis. The GDF Suez Cape Ann has left China as previously reported. It is currently trading as an LNG carrier within Engie's fleet. And we are fully committed to supporting its move to India, where H-Energy has announced it has agreed to charter the unit from Engie for at least five years. The Lampung continues to operate on its 20-year contract in Indonesia. And the Gallant, in addition to the unscheduled maintenance at the first quarter, we undertook some planned maintenance in early May that will affect second quarter by approximately 8 days of off-hire. The scheduled maintenance is an annual event that we aim to complete in advance of the summer season, when demand for gas in Egypt is at its highest. The work has been completed and the Gallant is now back to sending out its maximum capacity of 500 million cubic feet per day of gas on a regular basis. Last but not least, the Hoegh Gallant makes up the quintet, with startup and first quarter operations going very much to plan. Page 7 is our familiar contract chart. It shows that we still have an average over 12 years remaining on our contracts and it is 2025 before any of our assets go without contracted revenue. The contracted cash flows from our fixed-rate contracts is set to support our distributions for a good number of years to come. Page 8 gets into the quarter in more detail. The income statement reflects 100% consolidation of the Hoegh Grace with a non-controlling interest broken out and a net income line that reflects the 49% still held at the HLNG level. As commented upon previously, the equity earnings of joint ventures reflects a positive mark-to-market on the swaps. The impact of the same is also apparent at the consolidated level, although here it only represents the effects on the elements to which hedge accounting is not applied. The higher income tax expense for the quarter referred to previously can also be seen, although only approximately $700,000 of this is cash tax. Our segment table on Page 9 includes our 51% of the Hoegh Grace in the majority held FSRU column, where it is consolidated on a 100% basis before deducting 49% of its EBITDA contribution in arriving at our segment EBITDA. The 49% number being the $4.994 million number you can see around halfway down at first column. Whether you compare segment EBITDA with last year's numbers on the next page or simply gross up the noncontrolling amount, you can see that the Hoegh Grace made a healthy contribution to the quarter that was very much in line, if not moderately higher than expectations. Elsewhere, I would say that the joint venture contribution is around $200,000 under where it would have been had it not been for the startup of FSRU operations in Turkey. And costs in the other segments are also up slightly on this time last year, mainly because it includes nearly all the costs of the year-end reporting this year whereas more of them flowed into the second quarter last year. Page 10 sets out the comparative numbers for the first quarter of 2016. Turning to Page 11 and the details of the financial income and expenses in additional detail. I don't have anything particular to highlight on this page this quarter, but clearly the interest expense is up because of the debt assumed as part of the Grace acquisition. The balance sheet on Page 12 also shows the effect of consolidating the Grace, including a noncontrolling interest element that reflects the 49% remaining at the HLNG level. Elsewhere, long-term debt is falling in accordance with the amortization schedules on our facilities, and there is only a small change in intercompany debt levels. Page 13 sets out our distributable cash flow analysis for the quarter. Starting with the segment EBITDA, we add back other recurring cash flows and make adjustments for non-cash elements before deducting financial expenses and cash tax. Because we consolidate the Grace while only owning 51%, everything is further adjusted with noncontrolling interest lines. This quarter's replacement CapEx expense has been increased to $4.5 million from $3.9 million previously to reflect the 51% acquisition of the Grace. This equates to approximately $5 million per year for the FSRU on a 100% basis. And it includes an element for maintenance CapEx. Our approach on the replacement element is to take the historic newbuild cost inflated at approximately 1% over the remaining life of the assets and calculate the provision needed to build enough capital after reinvestment rate equal to our cost of debt that will enable us to replace the assets at the end of their useful lives. And that combines with the estimate of maintenance CapEx is how we get to the $5 million per-year number on a Grace basis. We have decided not to reduce replacement CapEx to reflect the currently highly attractive prices that the yards are offering on FSRUs for a couple of reasons. Firstly, the low price is unlikely to last, and secondly, it could mean us having to replace an existing vessel with more than one unit to maintain cash flows if they do. Page 14 provides a reconciliation of distributable cash flow back to the US GAAP measure of net cash provided by operating activities. Then turning our attention to the future, on Page 15, I include a reminder of the projects at the HLNG level that are either or are expected to become drop-down opportunities for HMLP. The acquisition of the next 49% of Grace is subject to market conditions, agreement on terms, and customary approvals. As these results show, the asset is operating according to expectations and provide real confidence in what stage two of the drop-down could deliver. Earlier today, HLNG provided an update on the Pakistan and Ghana projects in its call. Both are progressing according to schedule. The cooperation with the majors who are backing the Pakistan project were said to be particularly strong. As for Chile, HLNG's latest guidance on the environmental assessment and consultation process that has delayed the project is for a delay of between 12 and 18 months, which is what HMLP was already assuming. Moving onto the market outlook on page 16, and WoodMac here have produced a couple of nice charts. It has been tracking LNG deliveries to FSRUs globally. And it's interesting to note that the volumes flowing through FSRUs exceed those into both India and China. At around 30 million tonnes per annum, that's the amount which is currently being regasified by FSRUs, an upward trend that reflects the competitiveness of LNG as a fuel and the competitiveness of FSRUs as a means to import it. Today, LNG flows through FSRUs to a wide range of markets. The largest volumes go to the markets -- go to the mature gas markets of places such as Egypt and Pakistan. These are the kind of markets where there is demand for multiple FSRUs. Smaller volumes flow into more bespoke markets such as Lithuania and Colombia, where security of supply considerations are the primary drivers for contracting an FSRU and securing access to the LNG market. Turning to page 17, I do very much believe that the opportunity set is growing and the map serves to illustrate this point. There, there haven't been any new FSRU project announcements in the quarter, though a number of interesting projects at the tender stage, including a project in West Africa, a project for a second FSRU in Turkey, and another for an FSRU in Hong Kong, where China Light & Power and Hong Kong Electric would be the counterparties. This is in addition to a number of other projects that are moving forward with increasing pace. So let's have a look at how the FSRU market is set to meet this demand. And at the moment, we view it as being a healthy combination of balance and opportunity. The Hoegh LNG Group now has the most FSRUs in the market, if those on order are included. Five of those listed are part of HMLP, of course, and the remainder represent drop-down candidates. Many FSRUs in the other category are either on long lead times or are for bespoke projects, which means most of the competition for new contracts comes from the existing players, namely Excelerate, Golar, and BW Gas. We do now see conversions being offered in tenders, but as yet none have prevailed. And until one is actually ordered, we won't add them to this chart. Also worth a mention is the opportunity which HLNG doesn't overlook, which is that of replacing older first-generation FSRUs which are often conversions with more modern newbuilds, with the more modern newbuilds on which we focus. And as the bullet point shows, there is a total of four FSRUs that are serving contracts that are nearing expiry or with undetermined timelines. And as I'm sure others are going to be very much focused on replacing the older vessels when they come due for replacement. I think that's all I wanted to say on the market. I think the quarter has been a good quarter, and it's a quarter where we've integrated the new assets in Colombia, the acquisition of Grace went very smoothly, the first quarter operations have gone very smoothly. And we look forward to many years of cash flows from that asset going forward. And with that, I'd like to thank you very much for your attention. And I'd be more than happy to answer any questions.

[Operator:]

We will now being the question-and-answer session. [Operator Instructions] Our first question comes from Chris Wetherbee with Citigroup. Please go ahead.

[Chris Wetherbee:]

Hi, great. Thanks and good morning, Richard.

[Richard Tyrrell:]

Good morning, Chris.

[Chris Wetherbee:]

So I guess I want to start on the Gallant and just make sure I understood the maintenance issue, because I think you had some off-hire during the first quarter. Can you talk a little bit about that? I know we are talking about scheduled maintenance for 2Q, but just make sure – just kind of get a sense of what was going on. And if there are any other issues that we should be thinking about as 2017 progresses on that FSRU.

[Richard Tyrrell:]

Sure. The two were different. Let's start with the unscheduled off-hire of the first quarter. That was related to some legacy issues with the regas equipment, where we had a particular component that was failing we saw that a little bit last year, and as they fail, they've been replaced. So that first quarter downtime was in relation to replacing those components. Because it was related to the design, it’s something that's covered under the guarantee, which ultimately flows back in and ultimately flows back into the parent typically more than the MLP, simply because those kinds of things get addressed when negotiating new contracts typically rather than through any sort of cash – direct cash transfer. So in view of that, it’s something that's indemnified by HLNG and for which we received the $600,000 in indemnity payment for the quarter. So that was the unscheduled maintenance. The scheduled maintenance, which is for the second quarter, is a little bit different. That is maintenance, which just on this particular asset, has to happen on an annual basis. It's being used at exceptionally high utilization levels, and it's on a contract, which doesn't have really any flexibility at all for maintenance like some others. So while on other contracts, we can – we have a few days leeway to undertake maintenance, here we actually do have the leeway but we go off-hire. So that's why I flag it as being a massive at the second quarter.

[Chris Wetherbee:]

Okay, that's helpful. I appreciate that. And then switching gears to the Grace for a second. And just any thoughts or color you can give us in terms of the pace of the drop-down of the remaining ownership of the vessel that you don't already have, just thoughts about that maybe as 2017 plays out.

[Richard Tyrrell:]

Well, I've said that it's definitely something we want to do in 2017. I have certainly got a personal bias to do it sooner rather than later. And it really is going to be a question of the market and obviously coming together with the parent and agreeing on price and so on. However, given that it is a process we have gone through very, very recently, the latter element should be relatively straightforward.

[Chris Wetherbee:]

Okay, yes. So we should have a good comp in the market. That makes sense. Okay, last question, just broadly for the industry. You mentioned to your lower yard prices, you guys aren't making adjustments to your replacement CapEx, which makes sense. When you think about potential flexibility at the yard and then compare that to how some of the new contracts, some of the ones at the parent have been coming in. Do you think that any persistent decline in the price at the yard has meaningful impact on sort of where contract rates might be coming in over time? Just sort of thinking about the returns required on those investments and trying to get a sense of maybe how those two play out together and what your thoughts are going forward for contracts?

[Richard Tyrrell:]

Sure. At the moment, we haven't seen a major change to the rates. But I think that is probably down to the fact that the assets that are currently being bid on contracts are not the assets which are coming out of the yard at these lower prices. They are the assets which were built for a higher price. And the market is holding fairly firm on making a return based upon that higher price and not adjusting for how things might look going forward. Going forward, I think there could be some pressure on rates, although I would say that there haven't been that many newbuilds ordered recently at these lower rates. There are a few of them, but not that many, and whether these rates stay low I think remains to be seen.

[Chris Wetherbee:]

Okay, okay. All right, that's helpful. I appreciate the time. Thank you very much.

[Richard Tyrrell:]

Thanks for the questions, Chris.

[Operator:]

The next question comes from Ben Nolan with Stifel. Please go ahead.

[Steven Tittsworth:]

Hi, this is Steven Tittsworth on for Ben Nolan. Good morning. Just had a couple of market-related questions. The first one deals with the recent announcement between the U.S. and China regarding additional LNG imports in China helping to facilitate longer-term trade. Have you seen any increased tender activity for FSRU vessels from China?

[Richard Tyrrell:]

No, not as yet, and I'm not sure that we will necessarily. China is a bit of an unusual market in that it is not necessarily better suited to FSRUs, certainly not in the south of the country because of the typhoons that come through on a regular basis. And then, of course, the sort of Chinese I think have a cultural preference for building stuff themselves, which means onshore, I think. So I think for those reasons, it's unclear how great a market FSRUs will be and how great a market China will be for FSRUs. I think there are some opportunities up in the north of China where you don't have the same typhoon issue. But the typhoons are a real issue in the south.

[Steven Tittsworth:]

Okay, that makes sense. And then my next question deals with a – I know you briefly talked about the two new FSRU contracts, the one in Ghana. I was wondering if you could provide just a little bit more color in terms of how that newbuild is progressing, how the overall language of the contract is, your talks with the counterparty. If you could just give a little bit more color on that project.

[Richard Tyrrell:]

Sure. And that's obviously a project up at the HLNG level rather than at the HMLP. But my – from what I know about that project, it is still moving forward on the timetable that we originally envisaged. I don't think it's completely so clear of the politics, but it's getting close. And the only other outstanding matter there is the financing of the onshore infrastructure part of the projects, which I think if everything else comes together, should be relatively straightforward.

[Steven Tittsworth:]

Okay. And then my last question, and I know you are not directly involved with this, but I was wondering if you could give me your thoughts on LNG carriers being converted to FSRUs. There was a lot of news about that late last year with a lot of companies ordering long lead time items. And so far, you haven’t really heard a lot of news about that. So I know, again, you are not really involved in that, but if you could just give your thoughts or comments on that.

[Richard Tyrrell:]

More than happy to. I think it’s a good and very relevant question. And up at the HLNG level, we did have an initiative to make sure we could compete with others in that market because it does have the advantage of being able to deliver a FSRU on a shorter lead time. So think more 12 months as opposed to 20, 28 months. So we have got ourselves positioned to chase those kinds of opportunities if and when they come along. But I’d say two things. One

[Steven Tittsworth:]

Okay. All right, that makes sense. Again, I appreciate the color. Thank you.

[Richard Tyrrell:]

Welcome. Thanks for the questions.

[Operator:]

The next question comes from John Humphreys with Bank of America Merrill Lynch. Please go ahead.

[John Humphreys:]

Good morning, Richard. How are you?

[Richard Tyrrell:]

I’m well, thanks, John. How are you?

[John Humphreys:]

Yes, thanks. I just wanted to get into – on the last presentation, you had a nice slide showing the growth trajectory and cadence. And Hoegh Grace is the 51% drop-down being on path for the goal of doubling in size by 2020. Just wanted to see if the cadence and expectation of in that drop-down 2018, 2019, 2020, if that has moved to the right at all now that it sounds like the remaining 49% of Hoegh Grace – and obviously sort of dependent on the market.

[Richard Tyrrell:]

We are always going to be, I think, dependent on the market, but I know exactly the slide you are talking about. I did think about including it, but I looked at it and really nothing has moved on that chart. And if you look at the dates on the page, which has basically the same information but more in kind of dent chart style, then you can see that.

[John Humphreys:]

Okay. And this is sort of going back to what was it earlier asked 2017 is you are feeling that it happens within 2017 is likely? Or it just sounds in the release kind of there’s a real step-back from a commitment.

[Richard Tyrrell:]

No, I mean, I’m absolutely committed to doing it within 2017. It’s difficult to be too specific on these things clearly, but there is an absolute commitment to do something within 2017. I didn’t mean it to come across anything otherwise.

[John Humphreys:]

Great, thanks. And then on the Slide 18, which is great to see sort of what the opportunity is there with – do you see speculative newbuild activity – what’s your expectation there with newbuild? As you said, newbuild prices at the yard is coming down and there are four newbuilds that are uncommitted. Is there a number of uncommitted newbuilds where you start to think that supply is really outpacing demand? Or is four sort of a number that you think is easily absorbed by the market?

[Richard Tyrrell:]

I’m not sure if this market works in quite the same way as the LNG shipping market, where there is sort of a real big sort of supply-and-demand element to it. I think because the lead time on these projects is so long and these assets do clearly cost a lot of money, it’s not a particularly sort of liquid market. People are still more building them to a required rate of return. And then we, at the parent level, obviously, go out and we have one on spec and Golar has one on spec and BW has an open one as well. But you are only really seeing the incumbent players following that strategy. And they are all being very cautious about it as well, in that we are not going out and ordering two on spec, for example. And neither is anyone else. So I think it is a reasonably balanced market. And for all the reasons which makes it a little bit more difficult a market to play in than the LNG carrier market, they are deterring others from simply just opening the checkbook and ordering something without really any firm plans for where it’s going to go.

[John Humphreys:]

Great, thanks for the color. That’s it for me, Richard.

[Richard Tyrrell:]

Thank you.

[Operator:]

The next question comes from Richard Diamond of Strait Lane Capital. Please go ahead.

[Richard Diamond:]

Yes, good morning, Richard. Is it fair to say that given the cost of an FSRU, which is I believe $150 million to $200 million, there is a disincentive to cut corners or technical specifications when ordering, especially in terms of complexity?

[Richard Tyrrell:]

I think those numbers, Richard, those are probably more LNG carriers. You probably need to add another $100 million or certainly another $50 million to $100 million onto those for the FSRUs, which I guess just serves to further emphasize the point. But I think it is true that people aren’t cutting corners. But these assets are relatively standardized and the cost of adding another regas train, for example, isn’t prohibitively high. So I think in general, people are sort of overspecifying them rather than trying to cut them back. Because ultimately, these contracts are great contracts and they are very long-term. But you do always have a bit of an eye to what you are going to do with the assets at the end of the contract. And clearly, the better specified it is, the more competitive it’s going to be at that time.

[Richard Diamond:]

Okay. And secondly, I listened to the Cheniere Energy call when they made the comment that 25% of their volumes went through at FSRUs. My question more pointedly is I know it’s a new business, I know these are very expensive assets, but is there a secondary market on FSRUs? And when they’ve come off contract, what has been market experience with redeploying them?

[Richard Tyrrell:]

I think when you are looking at that question, you’ve got to look very much at the specifications of the asset. And I think the FSRUs broadly fall into three categories. You have the older conversions, which are a bit small by modern standards and they tend to move onto smaller scale projects when they come off off-hire. We don’t have any of those. Then you have the intermediate generation of assets, which are sometimes driven by steam turbines as opposed to via engines, which are slightly less efficient. So those can typically find employment because they are of adequate size and they can send out sufficient amounts of gas to keep most customers happy. But because of that their inefficiencies, they have to adjust their rate to compensate for that. Then you have got the newer-build assets, which have got the engines as opposed to the turbines and are that much larger, like the HMLP vessels that really are still quite competitive. In terms of examples of FSRUs finding work once they’ve gone off contract, I think possibly the best example is the Neptune, which – and the Cape Ann, for that matter – which are our vessels that are on the long-term charter to Engie. And even though this is not Engie’s kind of core business, they have managed to find work for those vessels, firstly in China in the case of Cape Ann. That’s now going to go to India. And in the case of the Neptune, that’s in Turkey.

[Richard Diamond:]

Well, it’s an interesting market because it’s not analogous with the LNG shipping market. And really truly, I think the LNG converters are really looking to FSRUs to greatly expand their business. Thank you very much.

[Richard Tyrrell:]

Thank you very much for the question, Richard.

[Operator:]

[Operator Instructions] Our next question comes from Fotis Giannakoulis with Morgan Stanley. Please go ahead.

[Unidentified Analyst:]

Hi, Richard. This is Ben stepping in for Fotis. Good morning.

[Richard Tyrrell:]

Hi, Ben, good morning.

[Unidentified Analyst:]

Good morning. So just a couple of questions, more market-based. So from looking at your slides, it’s obvious that the market will become more fragmented through the end of the decade with the announcement of new entrants. And then there could be potentially more to come. I’m curious on your thoughts of what changes might come from this within the market?

[Richard Tyrrell:]

I think maybe – I am sure you are referring to the chart with the number of vessels and the newbuilds on it when you are making that point. I think maybe that sort of gives a – it slightly over-exaggerates how fragmented it’s going to become since a lot of those projects or assets which are in the other column are quite bespoke assets for certain projects. It’s not necessarily as if all those names are piling into the FSRU space. Gazprom, for example, they are clearly not going to pile into the FSRU space. That’s an asset which they are building for Kaliningrad for security supply reasons for that particular enclave. So I do think that the main players will remain the big four, so the ones on the left-hand side of that chart. You might see some other obviously very capable LNG carrier companies out there who have initiatives in this area breaking through as well. But I don’t see a massive flood of new entrants. And one thing that isn’t going to change is just the nature of these contracts. They are fairly specific to each location and that means that they aren’t agreed overnight or over a telephone call. There’s a lot of business development that goes into winning them. And that will I think inevitably play in favor of those who are focused on the FSRU as their primary product, such as ourselves.

[Unidentified Analyst:]

Sure. I appreciate that. It’s good color. And then my second question was I’m just curious – so with the ramp-up of supply that’s come on, how do you expect the trend of overall terminal or floating terminal regas utilization? It seems like the terminals are still operating at fairly low levels, likely between 40% and 50%. I am just curious on how you expect this to move forward.

[Richard Tyrrell:]

Yes, you are absolutely right in terms of the levels of utilization on average. In fact, I did those numbers like I went to the 30 million tonnes per annum that Wood Mac have got and divided it through by the 21 assets which are currently operating and you get to around that sort of level. So – but of course, it varied a lot depending on the projects. So in Egypt, you have got 100% utilization. And you are going to have that in any place whether they well-developed gas market. So Egypt, Pakistan, Bangladesh, maybe surprisingly some of the Middle Eastern countries that are importing LNG rather than burning oil. So they are always going to be running at that kind of those high levels of utilization. And then you always going to have projects like we’ve got in Lithuania, where it runs at a higher level of utilization when taking in LNG rather than taking pipeline gas. But of course, Gazprom in that particular case, they can compete with LNG by lowering the price of the pipeline gas. And from time to time, that’s what they do. And when they do that, the Lithuanians take more from the pipe than they do from the terminal. You have Colombia. Slightly different reasons that’s a security supply type asset. But it’s to basically to provide access to LNG when it doesn’t rain and they need to switch on the thermal generation capacity, which is expensive if they are going to be burning oil. But it’s relatively efficient if they can access the LNG markets. That’s an asset which is there is for insurance purposes as much as anything and it’s never going to be importing a huge amount of LNG as a result.

[Unidentified Analyst:]

All right. Thank you so much. That was great.

[Richard Tyrrell:]

Thanks, Ben.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to Richard Tyrrell for any closing remarks.

[Richard Tyrrell:]

Firstly, I’d like to thank everybody for listening and for the excellent questions. If anyone has any follow-up, please don’t hesitate to get in touch. And for those who are going to be at the MLP Association conference next week, I’ll see you there. Thanks again.