- Crowley and Naturgy have partnered to supply LNG to Puerto Rico, enhancing energy reliability despite Jones Act restrictions.
- Crowley’s reflagged American Energy tanker delivers LNG from Texas to Puerto Rico, powering up to 80,000 homes annually.
- Puerto Rico diversifies its energy sources, shifting from Trinidad to U.S. LNG while navigating challenges posed by U.S. shipping regulations.
Crowley, a U.S. shipping firm, has teamed up with Spain’s Naturgy to supply liquefied natural gas (LNG) to Puerto Rico. This partnership overcomes challenges posed by the Jones Act and strengthens the island’s energy supply.
Crowley’s American Energy LNG tanker now transports gas from the Corpus Christi terminal in Texas to Peñuelas, on Puerto Rico’s southern coast. The vessel, with a capacity of 130,400 cubic meters, powers up to 80,000 homes annually. This agreement aims to enhance Puerto Rico’s energy reliability, as the island has relied on alternative LNG sources, particularly from Trinidad.
The Jones Act of 1920 mandates that U.S. ports transport goods on American-built vessels. Crowley reflagged the American Energy, built in France 31 years ago, under U.S. registration through a special provision. This rule allows ships built before 1996 to operate under the U.S. flag if crewed by Americans. Crowley’s reflagging maneuver enables it to comply with the Jones Act while supporting Puerto Rico’s LNG needs.
Expanding similar projects faces challenges. U.S.-flagged LNG tankers remain in low demand, and the Jones Act restricts LNG shipments between U.S. ports. However, this effort marks a key shift in Puerto Rico’s strategy to stabilise its energy grid.
Puerto Rico ended its LNG contracts with Trinidad, a long-term supplier. The island now relies on the U.S. for a more dependable energy supply. Naturgy’s involvement strengthens its position in the U.S. market and boosts its global competitiveness. This agreement could create opportunities for other LNG partnerships, though strict Jones Act rules may limit such ventures.
Besides Crowley’s efforts, Puerto Rico continues to work with New Fortress Energy. New Fortress operates an offshore LNG terminal in Mexico, using a waiver from U.S. Customs authorities to bypass Jones Act restrictions. This setup allows Puerto Rico to diversify its supply options.
The Crowley-Naturgy partnership highlights the importance of securing diverse LNG sources. By increasing supply routes, Puerto Rico plans to reduce energy costs and ensure reliable power generation. As the island’s LNG needs grow, these initiatives play a vital role in its energy future.
While the Jones Act poses regulatory challenges, this partnership shows how U.S. companies can work within the framework to meet energy demands. Crowley’s reflagging of the American Energy offers a potential model for others, though the lack of U.S.-flagged LNG tankers remains a significant hurdle.
This partnership marks a major step forward for Puerto Rico’s energy strategy. As the island seeks to optimise its energy mix, ensuring steady LNG supplies becomes essential. Though the Jones Act imposes limits, innovative approaches like the one used by Crowley and Naturgy could help meet Puerto Rico’s future energy needs.