Page 11 - NorthAmOil Week 50 2020

NorthAmOil COMMENTARY NorthAmOil

Total expands LNG footprint with

ECA LNG equity stake purchase

France’s Total has agreed to buy an equity stake in Sempra Energy’s Energía Costa

Azul LNG project, further expanding its already extensive LNG footprint

MEXICO-US SEMPRA Energy has agreed to sell a 16.6% Sempra hopes that the plant’s location will
equity stake in the Energía Costa Azul (ECA) give it a competitive advantage, allowing it to
WHAT: LNG project in Mexico to France’s Total, the two export LNG to Asia without using the congested
Sempra has agreed to companies said this week. The announcement Panama Canal. Indeed, according to consul-
sell a 16.6% equity stake comes as ECA LNG continues to make head- tancy RBN Energy, shipping a cargo from ECA
in the ECA LNG project in lines, having become the only LNG export pro- LNG to Asia should take roughly half the time
Mexico to France’s Total. ject to reach the final investment decision (FID) that it would require to ship it from the US Gulf
stage in 2020. Coast. RBN estimates that this reduced travel
WHY: For Total, meanwhile, the deal marks a fur- time, coupled with not needing to pay canal
The French company ther expansion of its already considerable LNG transit fees, could result in savings of around
already has an offtake footprint. The French company says on its $1 per million British thermal units ($27.66 per
agreement linked to website that it is the world’s second largest pri- 1,000 cubic metres) on shipping.
the project, which was vately owned LNG player, and it is likely to keep While RBN also pointed out some potential
sanctioned recently. investing in projects across the LNG value chain challenges related to sending US gas to the ECA
for the foreseeable future. LNG site, depending on which pipeline network
WHAT NEXT: is used, Sempra appears to be betting that the
Total is the world’s ECA LNG investment plant will benefit from its location. And given
second largest privately For ECA LNG, Total’s investment is the latest intensifying competition in the LNG market,
owned LNG player, and piece of good news following the FID on the which remains oversupplied, exporters will
will likely keep expanding project, which was announced on November 17. be keen to seize on any advantage available to
in the industry. The project is being developed by ECA Liquefac- them.
tion, a joint venture of two Sempra subsidiaries Now, Total’s investment appears to back up
– Sempra LNG and Infraestructura Energética Sempra’s confidence in its decision to pro-
Nova (IEnova), the company’s Mexican unit. The ceed with the project – though the fact that
first phase will consist of a single liquefaction the agreement came after an FID was reached
train with a capacity of 3.25mn tonnes per year may be indicative of LNG players being more
(tpy) of LNG and an initial offtake capacity of cautious about their LNG investments than
around 2.5mn tpy. The first phase is estimated to before.
cost $2bn to build and will source feed gas from Total already had an offtake agreement for
the US, transporting it via pipeline to Mexico’s ECA LNG, which was signed earlier this year,
Pacific Coast. for roughly 1.7mn tpy of LNG over a 20-year

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