Sempra to go ahead with Mexico's Costa Azul LNG export

U.S. energy company Sempra Energy said on Tuesday its ECA Liquefaction subsidiary will build the Costa Azul liquefied natural gas export plant in Mexico, the only LNG export project in the world to get a final investment decision (FID) in 2020.

On Friday, Mexico President Andres Manuel Lopez Obrador said the government would give the project an export permit as long as the company helped to offset an oversupply of gas in the area.

Sempra had been waiting for the 20-year export permit all year. It was in part held up by the novel coronavirus.

ECA Liquefaction is a joint venture between Sempra's Sempra LNG and Sempra's Mexico subsidiary, Infraestructura Energética Nova SAB de CV (IEnova).

ECA Liquefaction will build the plant at the existing Costa Azul LNG import plant at an estimated capital cost of around $2 billion. It is expected to produce first LNG in late 2024.

The export plant, which will have a nameplate capacity to produce about 3.25 million tonnes per annum (MMTPA) of LNG, already has 20-year agreements with units of Mitsui & Co Ltd and Total SE for the purchase of about 2.5 MTPA from the project's first phase.

Costa Azul's Pacific Coast location gives it an advantage over competing U.S. Gulf Coast export plants because it is closer to growing Asian markets. U.S. plants usually ship LNG to Asia through the Panama Canal.

Investment demand for LNG ran high for several years due to heavy consumption from mostly Asian countries to meet rising energy demand and diversify fuel sources away from dirty coal and oil.

This year, however, oil and gas companies around the world pushed back decisions on new LNG terminals after the coronavirus caused global energy demand and prices to collapse. (Additional reporting by Arundhati Sarkar in Bengaluru; Editing by Shinjini Ganguli, Marguerita Choy and Barbara Lewis)

 

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