International:
Mitsui eyes added LNG offtake, equity stake in North American LNG
Washington — The US’ Sempra Energy and Japan’s Mitsui have extended their partnership in North American LNG export development, announcing a non-binding memorandum of understanding Monday for Mitsui to participate in a second phase of the Cameron LNG project in Louisiana and a possible future expansion of the Energia Costa Azul project in Baja California, Mexico.
The MOU contemplates Mitsui buying up to one-third of available capacity from the Cameron LNG Phase 2 expansion, as well as Mistui’s potential offtake of about 1 million mt/year of LNG and a possible equity stake in a future phase expansion of the western Mexico project, the companies said in a statement.
The two companies already are partners in the first, roughly 12 million mt/year phase of Cameron LNG. That Sempra-led project is a joint venture of San Diego-based Sempra, France’s Total and Mitsui — a company jointly owned by Japan’s Mitsubishi and NYK.
The first train at Cameron LNG in Hackberry, Louisiana, began commercial operation in August, with the second and third trains expected to start production the first and second quarters of 2020. Phase 2 entails two more trains and up to two storage tanks, and has already been approved by the Federal Energy Regulatory Commission.
ADVANCING HEADS OF AGREEMENT
As to ECA LNG, Sempra affiliate IEnova previously signed a heads of agreement in November 2018 with Total, Mitsui and Tokyo Gas for the full export capacity of Phase I, which is expected to produce 2.4 million my/year of LNG upon entering service in 2023. Mitsui is negotiating to finalize a sales-and-purchase agreement of 800,000 mt/year from that phase.
But a final investment decision on the project has been delayed until the first quarter of 2020, IEnova said October 24, as it continued to iron out details of the project’s engineering, procurement and construction bidding process, its offtake contracting as well as regulatory permitting.
The future ECA expansion would add more trains and envisions export capacity of about 12 million mt/year.
FEEDGAS QUESTIONS
Supplying feedgas to the proposed Costa Azul LNG export facility is likely one of the key obstacles to a positive FID. While the existing import facility is currently interconnected to existing pipelines, those pipelines often run full due to demand in the Southern California markets, according to S&P Global Platts Analytics. Therefore, any LNG project will need to either secure firm pipeline capacity from existing capacity holders or assess the possibility of further midstream expansions.
In unveiling the MOU, Sempra LNG President Justin Bird said the preliminary agreement “signals continued momentum in the growing US LNG export market, while reinforcing the unique competitive advantage Sempra offers customers seeking LNG export capabilities from the Gulf Coast, as well as the West Coast of North America.”
Motoyasu Nozaki, managing director of Mitsui’s Energy Business Unit II, said, “The agreement will contribute to expanding Mitsui’s uniquely diversified supply portfolio worldwide.”
Beyond those two projects, Sempra has proposed to build an LNG export facility in Port Arthur, Texas. It has received FERC approval and reached a preliminary deal with Saudi Aramco in May that calls for the state-run oil company to take a 25% stake in the project.