Firm building QatarEnergy-Exxon LNG plant in Texas (U.S.) files for bankruptcy
The lead contractor building a Texas liquefied natural gas (LNG) plant for QatarEnergy and ExxonMobil on Tuesday filed for Chapter 11 bankruptcy protection, citing challenges at the project.
Zachry Holdings, which held the lion's share of the $10-B construction project called Golden Pass LNG, said it was pursuing a "structured exit." Exxon said it would review construction timing and provide an update in the future.
Golden Pass LNG is being built at the site of a former gas-import terminal that has been converted to process natural gas for LNG exports. It is one of two large U.S. LNG terminals whose startup will significantly expand exports in the next 12 months.
"We, along with the other stakeholders, are considering all available options to implement a smooth transition and minimize any impacts," an Exxon spokesperson said. "We plan to continue to fully support Golden Pass LNG through completion." Exxon, which owns a 30% stake in the project, earlier this year said it expected first LNG production in the first half of 2025. "Because we have been unable to find a path forward, we have been forced to take action to protect our business," John Zachry, CEO of the San Antonio, Texas-based company, said in a statement on Tuesday.
Zachry Holdings said it faced cost challenges over a change order and billings schedule, and it engaged in negotiations with Golden Pass LNG for additional funding without success, according to its filing in U.S. Bankruptcy Court for the Southern District of Texas. Zachry's share of the project was valued at $5.8 B.
Prior to April 2024, Zachry said it was incurring weekly expenses of $30 MM to $40 MM for payroll, vendor payments, equipment and other costs, but was receiving approximately $70 MM/month from Golden Pass LNG. “In March of this year, Golden Pass began direct-paying vendors, and clawed back much of those funds from advance progress payments due to Zachry,” the filing said.
Rival LNG developer Venture Global LNG "does not anticipate any material impacts" on work at its Plaquemines LNG export facility in Louisiana as a result of the Zachry bankruptcy filing, a spokesperson said. Its plant is being constructed by a KBR and Zachry JV.
According to court filings, Golden Pass on May 8 notified Zachry of default of its engineering, procurement and construction contract, citing, among other factors, Zachry’s inability to pay subcontractors and vendors promptly, the court filing showed. Zachry that same day received a notice of default from another Golden Pass contractor, Chiyoda International, the company said. Unable to reach an agreement with Golden Pass, Zachry said it had no choice but to file for Chapter 11 protection.
Golden Pass LNG had warned earlier this month of possible impacts on construction of the first three trains of the project, which was designed to produce up to 18 million metric tons per annum of LNG. The project is one of two large LNG export plants that had been expected to expand U.S. exports in the next 12 months.
Related News
Related News
- Japan's Mitsubishi to acquire stake in Petronas LNG plant
- McDermott awarded Rovuma LNG Phase 1 FEED contract in Mozambique
- Wood leads industry project to accelerate CCUS with guidelines for CO2 specifications
- Fincantieri LNG-powered Star Princess launched in Monfalcone
- Picarro launches handheld solution for natural gas leak investigation and closed-loop leak management
- Picarro launches handheld solution for natural gas leak investigation and closed-loop leak management
- Fincantieri LNG-powered Star Princess launched in Monfalcone
- Sonatrach, Saudi Aramco raise prices for LPG by 3%–4% in October
- Amarinth secures $1-MM order of API 610 pumps for Coral North FLNG project in Mozambique
Comments