Sempra Energy's Infraestructura Energetica Nova SAB de CV unit said Oct. 24 that it would delay a final investment decision on its planned Energia Costa Azul liquefaction project on Mexico's Pacific Coast until the first quarter of 2020.
The announcement, made during the company's third-quarter earnings call, postpones the final investment decision, or FID, by at least several months as the company irons out details of the project's engineering, procurement and construction bidding process, its off-take contracting and regulatory permitting.
"We continue to advance on all three fronts," said Tania Ortiz Mena, the CEO of Infraestructura Energetica Nova, or IEnova.
In the permitting process, the last major hurdle, is a natural gas export permit required from Mexican regulators, according to Ortiz Mena. An application for the permit has been submitted and is awaiting a decision.
The company is not expecting any major challenges in the construction and permitting process for a greenfield gas pipeline required to supply the project since its planned path runs parallel to existing pipes, executives said.
The decline in global LNG prices this year, which saw the Platts JKM benchmark Northeast Asia import price fall into the low $4/MMBtu during the summer months, is another factor that has not been a big concern for IEnova, executives on the Oct. 24 call said.
"We're selling at a fixed price," Ortiz Mena said. "Our prospective customers are very committed, so we're not seeing any impact from the decline in LNG prices in North America."
IEnova signed heads of agreement in November 2018 with Total SA, Mitsui & Co. Ltd. and Tokyo Gas Co. Ltd. for the full export capacity of phase one of the Energia Costa Azul LNG project. If realized, those agreements should result in definitive 20-year sales and purchase agreements. All three prospective customers are also in discussions with IEnova for equity stakes in the project.
Phase one of the project includes a single liquefaction train expected to produce 2.4 million tonnes per year of LNG or nearly 310 MMcf/d of natural gas equivalent.
The project is expected to enter service in 2023.
Jonathan Robinson is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.