Sempra Cleared for Mexican LNG Take-Off

US utility Sempra’s subsidiary Energia Costa Azul (ECA) LNG has had two authorisations that will allow it to proceed with its plan to liquefy and export gas that it has imported into Mexico from the US, it said March 31.

The approvals from the US Department of Energy (DOE) cover exports to countries that do not have a free-trade agreement (non-FTA) with the US. Being on Mexico's west coast, the plant's customers will be able to reach Asia without going through the Panama Canal.

The final investment decision will need binding customer commitments, permits, further export authorisation from the Mexican and US governments and financing, Sempra cautioned.

Sempra LNG COO Joseph Householder said: "ECA LNG's location on the west coast of North America is truly a differentiator and it has the potential to be a game changer. ECA LNG will source natural gas from some of the fastest-growing production regions in the US and provide our customers with a competitive advantage in accessing world markets, especially Asia," he said.

ECA LNG Phase 1 development is a single train LNG facility next to the existing LNG import terminal. It is expected to use existing LNG storage tanks, marine berth and associated facilities. Phase 2 of the project will include the addition of two trains and one LNG storage tank. The DOE authorisations allow the export of 636bn ft3 (about 13mn mt)/yr of US sourced LNG from these infrastructure projects. Phase 2 of the project will require additional DOE approval in order to export its full expected capacity, it said.

The existing ECA receipt terminal was the first LNG import terminal constructed on North America's west coast about 15 miles north of Ensenada, Baja California, it began commercial operations in 2008 and is capable of processing up to 1bn ft3/day.

Last November, Sempra Energy announced that its subsidiaries IEnova and Sempra LNG had signed heads of agreements (HOAs) with affiliates of French Total, Japanese Mitsui & Co and Tokyo Gas for Phase 1 of the ECA LNG project, subject to reaching definitive agreements. TechnipFMC and Kiewit were selected as the engineering, procurement, construction and commissioning (EPC) contractors for the project, subject to reaching a definitive agreement on the EPC contract.