Golden Pass LNG contractor Zachry files for bankruptcy

US construction company Zachry said on Tuesday it has filed for bankruptcy, initiating a structured exit from the Golden Pass LNG export project in Texas due to “financial challenges” related to the construction of the facility owned by QatarEnergy and ExxonMobil.

Zachry Holdings (ZHI) and certain of its subsidiaries have filed to start the Chapter 11 process in the US Bankruptcy Court for the Southern District of Texas that “provides them with time and flexibility to resolve issues related to the Golden Pass LNG (GPX) export terminal project in Sabine Pass,” the firm said on Tuesday.

This restructuring is intended to strengthen the company’s overall financial position, while work at all remaining jobsites is continuing without interruption, it said.

The company expects that its cash on hand, along with cash generated from operations, will provide “sufficient liquidity for the company to meet its ongoing business obligations during the court-supervised process.”

A joint venture of Chiyoda, McDermott, and Zachry named CCZJV is building the three Golden Pass LNG trains worth more than $10 billion next to the existing LNG import terminal.

State-owned QatarEnergy owns a 70 percent stake in the Golden Pass project with a capacity of more than 18 mtpa and will offtake 70 percent of the capacity, while US energy firm ExxonMobil has a 30 percent share.

ExxonMobil said earlier this year that the partners were expecting to start LNG production at their Golden Pass LNG export terminal in the first half of 2025.

“Significant challenges and disruptions”

John B. Zachry, chairman and CEO of ZHI said in the statement that, “as the project’s lead contractor, we have navigated significant challenges and disruptions stemming first from the Covid-19 pandemic and, more recently, international geopolitical issues.”

He said these “unforeseen disruptions have resulted in significant financial strain while meeting targets and keeping the project appropriately staffed.”

“We have been transparent with GPX and its shareholders as we have attempted to reach a mutually agreeable resolution to these issues. Because we have been unable to find a path forward, we have been forced to take action to protect our business,” he said.

“The process we are starting today provides us mechanisms to initiate a structured exit from the GPX project. It also enables us to take certain actions that will improve our performance and better position our business for the future,” Zachry said.

Worth noting here, this process is entirely unrelated to operations at Zachry Corporation as the Zachry organization was in 2008 realigned into two separate and unaffiliated business entities, Zachry Corporation, led by David Zachry, and Zachry Holdings (ZHI), led by John Zachry.

According to a court filling, estimated assets are between $1 billion and $10 billion, and estimated liabilities are between $1 billion and $10 billion.

ZHI said it has filed a number of customary motions seeking court authorization to continue to support its ongoing operations during the court-supervised process.

Subject to approval of these motions, the company does not expect this process to impact employee wages, health and welfare benefits plans, or qualified retirement savings plans.

The company expects to receive court approval for these requests.

ZHI also intends to “pay vendors and suppliers in full under normal terms for goods and services provided during the bankruptcy case,” it said.

Golden Pass LNG says project 75 percent completed

LNG Prime invited Golden Pass LNG to provide a comment on the matter.

“Golden Pass LNG acknowledges the bankruptcy filing by Zachry Industrial, Inc., a party to the EPC contract for construction of our LNG terminal,” a spokesperson for Golden Pass LNG said.

“Work continues on the project with McDermott and Chiyoda, the other two parties to the EPC contract, with thousands of workers on site. The project is already 75 percent progressed and we are committed to completing the project,” the spokesperson said.

(Updated with a statement by Golden Pass LNG.)

- Advertisements -

Most Popular

US FERC to decide on Venture Global’s CP2 LNG project

The US FERC is set to decide next week on Venture Global LNG's proposed CP2 LNG project in Louisiana. According...

Golden Pass LNG to speed up pipeline construction

QatarEnergy and ExxonMobil are seeking approval from US energy regulators to increase the peak workforce to speed up the...

Chevron resumes Wheatstone LNG production

Chevron’s unit in Australia has resumed production at its 8.9 mtpa Wheatstone LNG terminal near Onslow. “Chevron Australia has resumed...

More News Like This

Golden Pass LNG to speed up pipeline construction

QatarEnergy and ExxonMobil are seeking approval from US energy regulators to increase the peak workforce to speed up the...

Japan’s Chiyoda provides Golden Pass LNG update

Japan's engineer Chiyoda has released an update regarding the construction of the Golden Pass LNG export project in Texas,...

QatarEnergy, ExxonMobil update on Golden Pass LNG work

Energy giants QatarEnergy and ExxonMobil released the latest construction update for their Golden Pass LNG export terminal on the...

QatarEnergy seals 27-year LNG supply deal with Taiwan’s CPC

State-owned QatarEnergy and Taiwan's CPC signed a 27-year sale and purchase deal for the supply of liquefied natural gas...