Page 5 - GLNG Week 21 2022

GLNG COMMENTARY GLNG

almost nothing publicly. ECA was initially built for the purpose of
Even so, assuming that the report is cor- establishing a new means of delivering gas to
rect, Shell and Gazprom’s latest defeat in court North America, on the assumption that the US
is important. After all, Sempra did describe the and Mexico would need imports from far-flung
lawsuit in an extended report on its performance sources. Shortly after it came on stream, though,
in the third quarter of 2021 as a threat to the suc- hydraulic fracturing (fracking) techniques took
cess of the ECA project, saying: “One or more the US oil industry by storm, opening up uncon-
unfavourable final decisions on these disputes or ventional reserves that had hitherto been inac-
challenges could materially adversely affect our cessible. As a result, US domestic gas production
existing natural gas regasification operations and soared, and the US quickly became a net gas
proposed natural gas liquefaction projects at the exporter – and this, in turn, meant that the case
site of the ECA Regas Facility and have a material for IEnova’s ECA regasification terminal became
adverse effect on Sempra’s business, cash flows, much less compelling.
financial condition, results of operations and/or Nevertheless, the Sempra subsidiary retooled
prospects.” its plans and opted to transform the facility into
Thus far, the lawsuit has not stopped Sempra an LNG export terminal capable of receiving
or its Mexican unit from starting work on the US-produced gas from the Permian basin in
ECA project. In fact, last November, Justin Bird, Texas and liquefying it for delivery to foreign
the CEO of the US company’s Sempra Infra- markets. It also drew up a strong new business
structure subsidiary, said that work on the ECA case for the project, noting that ECA’s location
Phase 1 project was moving forward. on Mexico’s west coast would allow for rela-
“At ECA LNG Phase 1, engineering, equip- tively faster sailing to Asia, where demand for
ment, fabrication and site preparation are well gas is strong, without the need to pass through
underway,” he stated during an earnings call. the Panama Canal, as cargoes from the US Gulf
“The project is on time and on budget, and we Coast (USGC) region must do.
continue to expect first LNG production by the Sempra managers remain confident that Asia
end of 2024.” is a long-term growth market for LNG made
with US gas, despite the recent upswing in Euro-
Total turnaround pean demand that has followed the outbreak of
Assuming that the company meets this deadline, war in Ukraine. As such, reports that the ICC
it will be in the impressive position of having arbitration court has ruled in IEnova’s favour,
converted ECA from a gas import facility into thereby removing one more obstacle to the ECA
a gas export facility within the space of 15 years. project, is good news for the company.™

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