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Sempra's Cameron LNG reaches settlement with contractor on $10B export facility

Sempra Energy's Cameron LNG entered into a settlement agreement with its contractor, CCJV, to resolve certain claims and align all parties toward the goal of having all three planned liquefaction trains for the export project producing LNG in 2019.

The settlement, which includes claims related to Hurricane Harvey as well as additional contract and bonus payments, is within Cameron LNG's construction budget and financing commitments and includes incentives for additional milestones, according to a Dec. 19 news release. It is subject to certain conditions that will reflect improvement to Chicago Bridge & Iron Co. NV's credit support to the project, Sempra said. CCJV is a joint venture between an affiliate of CB&I and Chiyoda International Corp.

According to a Form 8-K filed by Sempra, the agreement waives schedule-related liquidated damages related to the original contract schedule and sets a new start date for such damages. The company also reiterated that it believes all three trains will be producing LNG in 2019.

Sempra delayed its expected in-service date for its first liquefaction train from mid-2018 due to construction delays. The contractor attributed the construction delays to low construction worker productivity, weather challenges and increased labor costs, and it sought to recover certain costs from Cameron that it incurred while working on the $10 billion facility.

The project is designed to have three liquefaction trains with export capacity of 12 million tonnes per annum, or about 1.7 Bcf/d, of LNG. Sempra expects to earn between $300 million and $350 million in 2020 from Cameron LNG, with increases over time.

Cameron LNG is owned by the Sempra subsidiary Sempra LNG & Midstream, Engie SA, Mitsui & Co. Ltd. and Japan LNG Investments LLC, which is jointly owned by Mitsubishi Corp. and Nippon Yusen Kabushiki Kaisha. Sempra indirectly owns 50.2% of Cameron LNG.