Page 4 - LatAmOil Week 20 2022

LatAmOil COMMENTARY LatAmOil

(Image: ECA)
IEnova facing one less

obstacle to ECA LNG project

The ICC arbitration court has reportedly ruled against Shell and Gazprom in a

dispute stemming from a change in terms and conditions that dates back to 2019

EARLIER this month, IEnova, the Mexican unit when Shell Mexico and Gazprom Marketing
of US-based Sempra Energy, quietly moved one and Trading Mexico began seeking arbitra-
WHAT: step closer to launching the first stage of the LNG tion. They took this step in response to IEno-
An arbitration court has export terminal it intends to build at the Energia va’s announcement in 2019 of an update to the
reportedly denied Shell Costa Azul (ECA) site in Baja California. general terms and conditions for use of the ECA
and Gazprom’s bid to According to a report from Global Arbi- regasification facility.
cancel LNG storage and tration Review, Sempra revealed in the first Even though the Sempra subsidiary had
regasification agree- week of May that a tribunal of the International secured approval for those changes from Mex-
ments with IEnova. Chamber of Commerce (ICC) arbitration court ico’s Energy Regulatory Commission (CRE),
rejected an attempt by units of Shell (UK) and Shell and Gazprom asserted that they repre-
WHY: Gazprom (Russia) to terminate agreements sented a breach of the 2009 contracts and a basis
The ruling removes a signed in 2009 for the use of LNG storage facil- for declaration of force majeure. Accordingly,
legal obstacle to the con- ities on the Mexican coast. The storage facilities they stopped making the payments due to IEn-
struction of the Energia in question are located at ECA, where IEnova ova under their agreements for LNG regasifi-
Costa Azul (ECA) LNG
export terminal. has already built a regasification terminal for the cation and storage. In turn, IEnova responded
purpose of importing natural gas into Mexico by rejecting the two companies’ claims and
WHAT NEXT: and the US. drawing on the letters of credit (l/c) they had
Sempra remains confi- Global Arbitration Review’s report could provided as security. Gazprom resumed regular
dent in ECA’s ability to not immediately be confirmed. If it is correct, payments in 2020, after formally joining Shell in
serve customers in Asia. though, the ICC has effectively put to rest a legal its request for arbitration, but IEnova continued
dispute that has been simmering since 2020, to draw on Shell’s l/c..

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