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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..



       P4                                       www. NEWSBASE .com                           Week 20   19•May•2022
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