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Energia Costa Azul LNG Project Secures HOAs for Phase 1 Capacity

Sempra Energy subsidiaries have clinched heads of agreements (HOA) with Total SA, Mitsui & Co. Ltd. and Tokyo Gas Co. Ltd. to take capacity from Phase 1 of the proposed Energia Costa Azul (ECA) natural gas export project in Baja California, Mexico.

Mexico unit Infraestructura Energetica Nova SAB de CV, aka IEnova, and Sempra LNG & Midstream, signed the three HOAs to supply liquefied natural gas (LNG) from the proposed 2.4 million metric ton/year (mmty) project.

ECA Phase 1 is to be a single train liquefaction facility sited adjacent to an existing LNG import terminal. The three companies each potentially could purchase 0.8 mmty from Phase 1.

"These three HOAs mark a significant milestone for the development of the ECA liquefaction export project, supporting Sempra Energy's strategic vision of becoming North America's premier energy infrastructure company," Sempra COO Joseph A. Householder said.

The HOAs for Phase 1 contemplate the parties negotiating and finalizing definitive 20-year LNG sales and purchase agreements.

A final investment decision is targeted in late 2019, with first LNG exports potentially in 2023.

IEnova CEO Carlos Ruiz Sacristán said the partnerships with the big global gas suppliers “should provide low-cost, flexible operations and reliable LNG to the Pacific Basin market and to supply the Baja California peninsula market in Mexico.”

Total’s Philippe Sauquet, president of gas, renewables and power, said the project would “benefit from synergies with existing infrastructure and from a significant shipping cost advantage for our customers in Asia.”

Total, which already is putting its LNG export stamp in Texas and Louisiana, last Monday entered a memorandum of understanding (MOU) to help Sempra develop ECA and the Cameron, LA, LNG facility now underway. Total is a 16.6% stakeholder in Cameron LNG; Mitsui also is a joint venture partner.

According to terms of the MOU, Total may take up to 9 mmty of combined offtake from the Cameron project and the ECA facility. (Total also has a 23% stake in Tellurian Inc.’s proposed Driftwood LNG for Louisiana, which would have capacity to export up to 27.6 mmty if the project advances.)

The ECA LNG receipt terminal was the first constructed on the west coast of North America, about 15 miles north of Ensenada, Baja California. The terminal began commercial operations in 2008 and is capable of processing up to 1 Bcf/d.

The HOA with Mitsui is “another significant milestone to further strengthen the strategic partnership with Sempra LNG and IEnova in a broad range of business opportunities," said Mitsui’s Hirotatsu Fujiwara, COO of Energy Business Unit II.

In June, TechnipFMC and Kiewit were selected as the engineering, procurement, construction and commissioning contractor for ECA.

In addition to the ECA and Cameron facilities, Sempra is developing the Port Arthur, TX, LNG export project, which would have two liquefaction trains capable of producing 11 mmty if it advances.

The ultimate participation of Total, Mitsui and Tokyo Gas in ECA LNG remains subject to finalizing definitive agreements, among other things.

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