Sempra, Bechtel ink $10.5 billion EPC contract for Port Arthur LNG

US LNG firm Sempra Infrastructure, a unit of Sempra, and compatriot engineering and construction firm Bechtel have executed the final EPC contract for the first phase of the proposed Port Arthur liquefaction project in Texas.

The two firms signed the original engineering, procurement and construction contract back in March 2020.

Now they have amended and restated the fixed-price contract which now is worth about $10.5 billion, according to a statement by Sempra Infrastructure.

Under the EPC contract, Bechtel would perform the detailed engineering, procurement, construction, commissioning, startup, performance testing and operator training activities for Phase 1 of the project.

The liquefaction project would consist of two liquefaction trains each capable of producing up to 6.73 mtpa. Sempra Infrastructure also plans a similarly sized second phase of the project.

Also, the first phase of the project includes three LNG storage tanks with a capacity of 160,000 cubic meters and a marine facility consisting of two berths for LNG vessels with a capacity of up to 266,000 cbm.

“Critical step” towards FID

Sempra Infrastructure still needs to take a final investment decision on the project.

“We are excited to achieve this milestone with Bechtel. The execution of the final contract is a critical step in advancing Phase 1 of Port Arthur LNG toward a final investment decision,” said Justin Bird, CEO of Sempra Infrastructure.

Earlier this year, US energy giant ConocoPhillips signed a preliminary deal with Sempra Infrastructure to buy a 30 percent direct equity holding in the project and an LNG offtake equivalent to about 5 mtpa.

Prior to this HOA, Sempra signed deals with German energy firm RWEUK’s Ineos, and Poland’s dominant gas firm and LNG importer, PGNiG, for volumes from the first phase of the LNG project.

Including this deal with ConocoPhillips, these HOAs total 9.65 mtpa to 11.65 mtpa of LNG from the first phase of the development, according to Sempra Infrastructure.

The firm also recently secured a 50-month extension from US energy regulators to build its 13.5 mtpa Port Arthur liquefaction project.

Sempra Infrastructure said the development of both phases of the Port Arthur LNG project is contingent upon completing the required commercial agreements, securing all necessary permits, obtaining financing, and reaching an affirmative final investment decision, among other factors.

Limited notice to proceed on or before November 15

Parent Sempra said in a separate filling to the stock exchange that Sempra Infrastructure “contemplates issuing a limited notice to proceed on or before November 15, 2022, to progress specified scopes of work”.

“If the full notice to proceed under the EPC contract is not issued by February 8, 2023, the EPC contract contemplates the possibility of owner issuing another limited notice to proceed which, if issued, would allow Bechtel to continue with the scopes of work previously authorized,” it said.

Each limited notice to proceed would set forth a maximum payment amount that would cap the owner’s exposure under such limited notices to proceed, Sempra said.

Prior to issuing the full notice to proceed, the EPC contract contemplates that Sempra Infrastructure would authorize Bechtel under the then-operative limited notice to proceed to access the site of the proposed first phase of the LNG project to perform certain preparatory site activities, it said.

(Article updated to include additional information.)

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