Sempra delays investment decision on its Texas LNG export plant

U.S. energy company Sempra Energy said t delayed the decision to build its Port Arthur liquefied natural gas (LNG) export plant in Texas from this year to the next as the coronavirus cuts global demand for the fuel.

Sempra, which reported its first-quarter earnings, said earlier this year that it expected to make a final investment decision on Port Arthur in the third quarter. About six weeks ago, however, the company warned that decision could be stalled.

Sempra is not alone. Energy firms around the world have pushed back decisions on LNG and other infrastructure projects as global demand for all forms of energy has collapsed because of the coronavirus outbreak.

Sempra, meanwhile, did not mention its planned Costa Azul LNG export plant in Baja California in Mexico in its earnings release. Instead the company said its Infraestructura Energetica Nova SAB de CV (IEnova) subsidiary in Mexico would likely defer some construction capital to 2021 as a result of the COVID-19 pandemic.

“IEnova is actively monitoring the current situation but as a result of the current pandemic, it is reasonable to expect that some of the construction capital will be deferred from 2020 to 2021,” Sempra said, without specifying which projects may see the delayed spending.

In March, Sempra said it planned to make a final investment decision to build Costa Azul in the second quarter of 2020.

At Costa Azul, Sempra has said it has nonbinding 20-year agreements with units of France’s Total SA as well as Japan’s Mitsui & Co and Tokyo Gas Co Ltd to buy about 0.8 million tonne per annum (MTPA) of LNG each.

At Port Arthur, Sempra has said Port Arthur LNG is in talks with units of Saudi Arabian Oil Co (Aramco) to buy 5 MTPA of LNG and invest 25% equity, and with Polish Oil & Gas Co (PGNiG) to buy 2 MTPA of LNG.

The initial phase of the Port Arthur project is expected to include two liquefaction trains that can export about 11 MTPA of LNG. (Reporting by Scott DiSavino in New York and Arathy S Nair in Bengaluru; Editing by Ramakrishnan M. and Jonathan Oatis)