Sempra completes first phase of Cameron LNG export project

US energy firm Sempra Energy expects to launch full commercial operations at its Cameron export LNG plant in the coming days as the third train reached substantial completion.

To remind, Cameron LNG started producing chilled fuel from the third and last liquefaction unit at the 12 mtpa Louisiana plant in May.

The $10 billion Cameron LNG launched commercial operations at the first train in August 2019 followed by the second unit in February 2020.

Sempra said on Wednesday announcing its quarterly results that the third unit reached substantial completion on July 31.

With the launch of commercial operations at the third train, the LNG export project marks the start of full run-rate earnings and cash flows, the firm said.

Sempra indirectly holds 50.2 percent of Cameron LNG while other project participants include affiliates of Total, Mitsui & Co and Japan LNG Investment, a company held by Mitsubishi Corp and NYK.

The US firm expects to garner nearly $12 billion of after-debt-service cash flow from the plant’s operations during the 20-year contract period.

Sempra and its partners are also planing to expand the facility with two additional trains.

The company already signed memorandum of understandings with Total, Mitsui and Mitsubishi for the second expansion phase.

Sempra’s executives said during an investor conference call on Wednesday that the partners were working on the preliminary front-end design studies.

Port Arthur LNG FID

The executives did not mention any timing on the final investment decision on Cameron expansion but they did say that Sempra continues to target FID on its Port Arthur LNG project in 2021.

Port Arthur LNG is a proposed two-train plant with up to 13 mtpa capacity in Southeast Texas with direct access to the Gulf of Mexico.

Sempra said earlier this year it would postpone the final decision on the project to 2021 due to market conditions caused by the Covid-19 pandemic.

“We’re working with our current and potential customers and remain disciplined on how we allocate capital to the project,” Sempra’s CFO Trevor Mihalik said.

“Ultimately, demand from customers will drive the timing of Port Arthur,” he said.

The Covid-19 pandemic has destroyed demand all over the globe pushing down oil, gas, and LNG prices to record lows.

This prompted many company’s to delay investment decisions but Sempra continues to “believe in the long-term fundamentals of the LNG market,” Mihalik said.

Sempra’s LNG head Justin Bird said during the call that the company continues to talk with Poland’s PGNiG and Saudi Aramco and other customers on the Porth Arthur development.

The company has a firm 2 mtpa deal for the project signed with PGNiG in December 2018.

It also has a preliminary deal with Aramco signed in May 2019 under which the latter would take a 25 percent stake in the LNG project.

Still waiting for Mexican LNG export permit

During the conference call, Sempra’s executives also touched upon the company’s planned liquefaction project at its existing regasification terminal in Baja California, Mexico.

The first phase of the single-train LNG export facility would have a capacity of 2.5 mtpa and Sempra already locked in offtake agreements for the entire capacity.

However, it still needs to secure a 20-year export permit from the Mexican government to be able to make an FID on the project.

“We continue to work closely with local authorities as well as the highest levels of the Mexican government on advancing the permit process,” Mihalik said during the call.

Sempra previously said it expected to make a decision on the project in 2020.

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