Houston — Sempra Energy has stopped providing a target for when it expects to make a final investment decision on whether to add LNG export capabilities at the site of its Energia Costa Azul regasification terminal in Mexico.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
The San Diego-based company has blamed the uncertainty on a slowdown in regulatory approvals in Mexico due to the coronavirus pandemic, saying a final investment decision is contingent on receiving a long-term export permit from the government.
Sempra has declined to address to what extent market disruptions due the virus may be affecting its decision whether to move forward with the first phase of the project along Mexico's Pacific coast. In an email responding to questions June 24, a spokeswoman said the company continues "to have an active dialogue with the Mexican government." She declined to offer an updated timetable.
Officials with Mexico's Energy Secretariat did not respond to multiple requests for comment June 25.
For existing LNG export operators in the US, low international prices and weak global demand have prompted the cancellation of approximately 130 cargoes that were scheduled to be loaded in the US between April and August. Multiple developers of new US liquefaction terminals have delayed FID until 2021 or beyond. Among them is Sempra, which put off FID on its proposed Port Arthur LNG project in Texas until next year.
Market watchers have seen Energia Costa Azul as a potential exception to the halt to newly sanctioned LNG capacity in North America, in part because of its relatively small first phase and the fact that it reached long-term offtake agreements with buyers of the supplies tied to the first phase.
On February 27, executives said Sempra expected to take FID on the Energia Costa Azul project within 30 to 45 days, which would have put the outside of the target in mid-April. After that date passed, executives said during an investor call May 4 that Sempra was targeting FID for the second quarter, which ends June 30. They said at the time that while the virus had slowed permit approvals in Mexico, they were confident they would get theirs in time to meet that target.
Phase 1 calls for a one-train export facility with capacity of around 2.5 million mt/year. Sempra has said it finalized preliminary offtake agreements with France's Total and Japan's Mitsui covering the full amount of the capacity. Feedgas would be shipped to the site from the US via pipeline. A second phase would be designed for 12 million mt/year of offtake.
For years, Mexico has had insufficient domestic production of natural gas to meet its power generation and home heating needs. As a result, it has been importing large amounts of natural gas from the US and building new pipelines to import even more. There has been a great deal of interest in possibly adding LNG export facilities on the West Coast of Mexico because of the proximity to Asia, the world's biggest importer of LNG, compared with the shipping distance from the US Gulf Coast. From the Pacific, shippers would also be able to avoid the increasingly congested Panama Canal.
Besides the ECA and Port Arthur projects it is developing, Sempra is majority owner of Cameron LNG in Louisiana, where three trains are currently in operation.