Page 13 - GLNG Week 46

GLNG COMMENTARY GLNG

Finally, an FID for ECA LNG

Sempra’s joint venture with its Mexican subsidiary IEnova has

become the first party to push an LNG export project to the FID

stage since the beginning of 2020

INVESTMENT US-BASED Sempra Energy and its Mexican the FID, Mexican President Andres Manuel
subsidiary IEnova have become the first – and, Lopez Obrador floated another suggestion, say-
WHAT: thus far, the only – investors to make a final ing that he might ask ECA LNG to do a favour
The ECA LNG venture has investment decision (FID) on an LNG export for CFE, the national power provider. Specifi-
decided to proceed with project since the beginning of 2020. cally, he proposed that the joint venture help
work on a new LNG export Sempra announced the FID in a statement CFE dispose of excess volumes of gas that have
facility. dated November 17, saying that ECA Lique- been stored for use along the country’s western
faction (ECA LNG), its joint venture with IEn- coasts.
WHY: ova, had taken this step. The FID will allow the CFE had acquired the gas in line with sup-
The decision follows venture to move ahead with the development, ply contracts signed during the previous pres-
several quid pro quo construction and operation of the Energía Costa idential administration, Lopez Obrador said.
proposals from the Azul LNG facility near Ensenada in Baja Cali- So far, though, it has not been able to use the
Mexican government. fornia State, it explained. gas, since most of the thermal power plants
According to previous reports, the new nat- (TPPs) in those regions burn residual fuel oil,
WHAT NEXT: ural gas liquefaction plant and export terminal he explained.
Sempra is not the only will be built at the site of an existing LNG import As of press time, it was not clear whether the
company hoping to make facility. Sempra said in its statement that the Mexican government had secured ECA LNG’s
Mexico’s Pacific coast LNG plant would have a single production train agreement to either of the proposals mentioned
a point of origin for LNG with a design capacity of 3.25mn tonnes per year above – or to any other quid pro quo arrange-
shipments to Asia. and an initial off-take capacity of around 2.5mn ment. Sempra did not mention the matter in its
tpy. Capacity could then rise later, if the par- statement on November 17.
ties decide to build another train in the second
phase of the project. Export capacity
The cost of establishing the first phase of the Third, the FID could mark the beginning of a
gas liquefaction plant and export terminal is new era for Mexico’s gas sector.
likely to amount to $2bn, the company added. To date, the country has not been much
It said ECA LNG was due to begin commercial involved in gas exports. Instead, it has focused
production in late 2024. on imports, in a bid to ensure that it covers
domestic demand for fuel and energy. Now,
Pandemic and permits though, its territory may serve as a place To date, the
The joint venture’s FID is a notable event for sev- where gas from foreign or domestic fields can
eral reasons. be liquefied and sent westward to Asia, where country has
First, it marks the first time since the begin- demand for LNG has been strong in recent not been much
ning of the year that investors have taken a years.
chance on a large-scale LNG export project. Sempra and IEnova are certainly counting on involved in gas
Many other companies have opted instead to this prospect. In fact, one of the two customers
delay FID in light of the drop in global energy that have agreed to buy 100% of the plant’s first- exports.
consumption and prices that has followed the phase production is Japan’s Mitsui. (The other
coronavirus (COVID-19) pandemic. is France’s Total, which may eventually take an
Second, it comes after nearly a year of wait- equity stake in ECA LNG, the statement said.
ing for the Mexican government to grant the Both companies have signed 20-year supply
last permit needed in advance of the FID. agreements.)
Mexico City has repeatedly floated the idea of The joint venture partners are not the only
making issuance of the permit conditional on parties to take notice of the potential for exports
ECA LNG’s willingness to perform other tasks. to Asia. Mexico Pacific Ltd (MPL), controlled
Earlier this year, for example, it indicated that by US-based Avaio Capital, is looking to build
it might insist that Sempra and IEnova com- its own LNG export terminal in Puerto Liber-
mit to building another LNG export facility tad, a city on the coast of Sonora State. Sarah
in Topolobampo, a city in Sinaloa State, in Bairstow, MPL’s chief commercial officer, said
exchange for the permit. during Industry Exchange’s Sixth Mexico Gas
And just a few days before Sempra announced Summit in September that the facility would use

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