Sempra takes FID on Mexico’s Costa Azul LNG export project

US firm Sempra Energy said Tuesday its unit ECA Liquefaction has decided to build the Costa Azul LNG export plant in Mexico.

This marks the first final investment decision for an LNG export project this year as the Covid-19 dampened demand pushing down prices to record lows.

Furthermore, the decision to build the plant follows a long-awaited approval by Mexico’s government for a 20-year export permit.

“This project would be the first LNG export facility on the Pacific Coast of North America that can help connect abundant natural gas supplies from Texas and the Western U.S. directly to markets in Mexico and countries across the Pacific Basin,” said Justin Bird, CEO of Sempra LNG.

ECA Liquefaction is a subsidiary of Sempra’s LNG unit and IEnova. The latter is the Mexican unit of Sempra.

According to Sempra, ECA will build the liquefaction plant at the Costa Azul LNG import facility for about $2 billion.

Sempra expects to fund the project with a combination of equity contributions and debt.

The first phase includes one train with a capacity of 3.25 mtpa and an initial offtake of about 2 mtpa.

ECA has secured definitive 20-year deals with Japan’s Mitsui & Co, and an affiliate of France-based Total. The latter is also in talks with ECA for a potential equity investment.

Additionally, a unit of TechnipFMC secured a lump-sum, turn-key EPC contract for the first phase of the LNG export facility.

Sempra expects first LNG from the plant in late 2024.

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