Costa Azul LNG Terminal

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Costa Azul LNG Terminal is an LNG terminal in Baja California, Mexico. It was originally built as an import terminal but is currently being converted into an export terminal.

Location

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Project Details (Import Terminal)

  • Operator: IEnova[1]
  • Owner: Sempra Energy[1][2]*
  • Parent: Sempra Energy[1][2]
  • Location: Ensenada, Ensenada, Baja California, Mexico
  • Coordinates: 31.988557, -116.846466 (exact)
  • Capacity: 7.6 mtpa[1][2]
  • Additional Proposed Capacity:
  • Status: Operating
  • Type: Import
  • Start Year: 2008[1][2][3]

*Note: KKR is a stakeholder in Sempra Energy's Sempra Infrastructure Partners[4]

mtpa = million tonnes per year; bcfd = billion cubic feet per day

Project Details (Export Terminal)

Project Details, Export Terminal Phase 1

  • Owner: Sempra/IEnova (83.4%), Total (16.6%)[5][6][7]
  • Location: Ensenada, Ensenada, Baja, Mexico
  • Coordinates: 31.988557, -116.846466 (exact)
  • Trains: 1[6]
  • Capacity: 3.25 mtpa[7][8]
  • Status: Construction[7][9][10][11][12]
  • Type: Export[6][7]
  • Start Year: 2026[13][14]

*Note: KKR is a stakeholder in Sempra Energy's Sempra Infrastructure Partners[4]

Project Details, Export Terminal Phase 2

  • Owner: Sempra/IEnova (83.4%),Total (16.6%)[5][6]*
  • Location: Ensenada, Ensenada, Baja, Mexico
  • Coordinates: 31.988557, -116.846466 (exact)
  • Trains: 2[6][9]
  • Capacity: 12 mtpa[6][8][9][15]
  • Status: Proposed[9][15]
  • Start Year:

*Note: KKR is a stakeholder in Sempra Energy's Sempra Infrastructure Partners[4]

mtpa = million tonnes per year; bcfd = billion cubic feet per day

Background (Import Terminal)

Costa Azul LNG Terminal comprises a sea port and natural gas processing center, located 15 miles north of Ensenada, Baja California, Mexico.[16] The project was launched in 2005[17] and began commercial operations in May 2008[18] as the first liquefied natural gas (LNG) terminal on North America's Pacific coast, with the capacity to process and regasify up to one billion cubic feet of natural gas per day.[19][20] LNG carrier ships capable of holding up to 220,000m3 of LNG can dock in the deep water port off the coast to unload LNG. Natural gas from the terminal is used to produce electricity and is fed by pipelines to factories. The terminal also supplies a 78-kilometer spur pipeline that runs north to connect with the Rosarito Gas Pipeline near the Mexico-United States border. Sempra Energy is a partner in the port with PEMEX. The 210,000m3 Al Safliya, transporting LNG from Qatar, was the first ship to dock and unload at the Costa Azul terminal.[19][20] Mexico's other Pacific coast LNG terminal is the Manzanillo LNG Terminal in Manzanillo, Colima state.

In 2015 Sempra Energy began considering plans to convert the import terminal into a natural gas liquefaction and export facility.[19]

Background (Export Terminal)

The proposed export terminal was originally announced as a joint venture between Sempra Energy and its subsidiary Infraestructura Energetica Nova SAB de CV (IENOVA).[21] Plans called for the terminal to be built in two phases[22], with natural gas to be sourced from Texas, Wyoming, Utah and/or New Mexico.[23] The proposed second phase reportedly was to require construction of a new pipeline from the Permian Basin or elsewhere in the western US.[22]

In April 2020, Sempra announced that it would postpone a final investment decision (FID) on its new Costa Azul terminal, pending Mexican government approval of the project's 20-year export license.[24][25] Sempra placed the investment cost of the proposed project at US$1.9 billion.[26] As of August 2020, Sempra said it was still waiting to receive the required export permit from the Mexican government.[27] Reuters subsequently reported that the Mexican government was looking to tie the awarding of the project's export permit to a requirement for Sempra's local subsidiary IENOVA to build the Vista Pacifico LNG Terminal - a separate LNG export facility in the port of Topolobampo on the Gulf of California - in order to help Mexico unload excess gas capacity.[28]

In November 2020, Sempra Energy announced that it had reached a Final Investment Decision (FID) for Phase 1 of the Costa Azul export terminal, reportedly the only FID for any LNG terminal in 2020.[10] In announcing the FID, Sempra confirmed that it had already negotiated definitive 20-year sale and purchase agreements with Mitsui & Co., Ltd. and Total SE for a combined total of 2.5 Mtpa of LNG[29], ensuring reliable markets for the bulk of Phase 1's LNG production.[10][12] The announcement placed the capital expenditures for ECA LNG Phase 1 at approximately US$2 billion, which was to be funded with "a combination of equity contributions and debt."[10] First LNG production from ECA LNG Phase 1 was expected in late 2024.[10]

In November 2020, Sempra and IEnova authorized TechnipFMC to proceed with engineering, procurement, and construction for the new export terminal.[30]

In December 2020, Total took a 16.6% equity stake in the project, with Sempra Energy and its local unit Infraestructura Energetica Nova (IEnova) each retaining 41.7% ownership.[5]

In December 2022, the US Department of Energy approved permits allowing Sempra to export US natural gas to Mexico for liquefaction at its Costa Azul and Vista Pacífico LNG terminals and onward shipment to non-FTA countries through December 2050.[1][31] Sempra had been making the case that additional international gas supply was crucial in the wake of Russia's February 2022 invasion of Ukraine.[32]

By July 2023, construction of the terminal was said to be 60% complete, with LNG exports expected to begin on schedule in 2025.[33]

In a May 2024 earnings call, Sempra Energy's CEO Jeffrey Martin confirmed that construction of Phase 1 of the export terminal was on track to begin commercial operation by summer 2025.[34]

However, in August 2024, with construction of the terminal 85% complete[13], Sempra reported that the project had suffered delays and cost increases due to labor and productivity challenges.[14] Reports indicated that initial LNG production would be pushed back from late 2024 into 2025[13], with full commercial operation and initial delivery to customers now anticipated for spring 2026[13][14], presumably just in time to meet the "export commencement deadline" of March 29, 2026 stipulated by the US Department of Energy.[35]

As of September 2024, Sempra Energy's website focused exclusively on Phase 1 of the Costa Azul export terminal, without any reference to Phase 2.[36] However, the company's most recent quarterly report (August 2024) continued to list Phase 2 as an active project in the development phase, with a capacity of ~12 mtpa.[15]

Financing

A final investment decision (FID) for the initial phase of the export facility, with estimated costs of US$2 billion, was reached in November 2020[37], after Costa Azul became the first LNG terminal in Mexico to receive an export permit from the government.[38] Financial close was reached for the LNG export terminal in December 2020. On the equity side, Sempra Energy and Total are together investing US$733 million. Debt financing of US$1.58 billion is being provided by a consortium of private banks comprising Banamex, BBVA, Mizuho, Natixis, Scotiabank and Sumitomo Mitsui Banking Corporation.[39]

Opposition

Numerous citizens' groups in Mexico, including Greenpeace, Nuestro Futuro, Alianza Mexicana Contra el Fracking, Conexiones Climáticas and Planeteando have called for the government to cancel all pending LNG export terminal projects in the country. The groups argue that LNG terminals create a host of serious negative impacts for local communities, including health effects from toxic chemicals such as benzine and nitrogen oxides, climate change associated with heightened levels of greenhouse gas emissions, devastation of marine life due to dredging, and the associated negative economic impacts on fisheries.[40]

Articles and resources

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 "GIIGNL Annual Report 2024 (p 46)" (PDF). GIIGNL. 2024-06-03.{{cite web}}: CS1 maint: url-status (link)
  2. ↑ 2.0 2.1 2.2 2.3 "2024 World LNG Report (p 157)". IGU. 2024-06-28.{{cite web}}: CS1 maint: url-status (link)
  3. ↑ "Mexico's Costa Azul LNG terminal receives first gas shipment". Professional Mariner. April 30, 2008.
  4. ↑ 4.0 4.1 4.2 KKR. Sempra Energy Announces Agreement To Sell Non-Controlling Interest In Sempra Infrastructure Partners. April 5, 2021.
  5. ↑ 5.0 5.1 5.2 Sempra says Total takes stake in major Mexican LNG project, Reuters, Dec. 10, 2020
  6. ↑ 6.0 6.1 6.2 6.3 6.4 6.5 Energia Costa Azul (ECA) LNG Project, NS Energy Business, accessed April 6, 2021
  7. ↑ 7.0 7.1 7.2 7.3 "2024 World LNG Report (p 120)". IGU. 2024-06-26.{{cite web}}: CS1 maint: url-status (link)
  8. ↑ 8.0 8.1 "About the Project | ECA Liquefaction Project". Energía Costa Azul. Retrieved 2022-06-01.{{cite web}}: CS1 maint: url-status (link)
  9. ↑ 9.0 9.1 9.2 9.3 "GIIGNL Annual Report 2023 (p 47)" (PDF). GIIGNL. July 13, 2023.{{cite web}}: CS1 maint: url-status (link)
  10. ↑ 10.0 10.1 10.2 10.3 10.4 "Sempra Energy Announces FID For Landmark Energía Costa Azul LNG Export Project". Sempra Energy website. November 17, 2020. Retrieved 2021-05-22.
  11. ↑ "Spotlight: Mexico's LNG export project pipeline". BNamericas. March 29, 2022.{{cite web}}: CS1 maint: url-status (link)
  12. ↑ 12.0 12.1 De La Rosa, Claudia (June 2, 2023). "LNG developers in Mexico face long road ahead". ICIS.
  13. ↑ 13.0 13.1 13.2 13.3 Čavčić, Melisa (2024-08-07). "Sempra hits 85% construction mark at natural gas liquefaction project in Mexico drawing closer to first LNG". Offshore Energy.{{cite web}}: CS1 maint: url-status (link)
  14. ↑ 14.0 14.1 14.2 "Sempra's Costa Azul LNG Project Delayed by Labor Issues". Pipeline & Gas Journal. 2024-08-06.{{cite web}}: CS1 maint: url-status (link)
  15. ↑ 15.0 15.1 15.2 "Second Quarter 2024 Earnings Results (p 16)". Sempra Energy. 2024-08-06.{{cite web}}: CS1 maint: url-status (link)
  16. ↑ Costa Azul LNG Terminal, Wikipedia, accessed March 2021
  17. ↑ "IEnova desarrolla, construye y opera infraestructura de energía en México". Energía Costa Azul. Retrieved 2021-04-21.{{cite web}}: CS1 maint: url-status (link)
  18. ↑ "Exhibit 13.1 - Sempra Energy 2009 Annual Report". US Securities & Exchange Commission. Retrieved 2021-04-21.{{cite web}}: CS1 maint: url-status (link)
  19. ↑ 19.0 19.1 19.2 PEMEX, Sempra LNG And Lenova Sign Memorandum Of Understanding For Developing Natural Gas Liquefaction Facilities in Mexico, Sempra Energy, Cision PR Newswire, 19 February 2015
  20. ↑ 20.0 20.1 Costa Azul LNG Import Facility, Whessoe: A Subsidiary of Samsung C&T, Accessed March 2021
  21. ↑ IENOVA expects decision on Mexico Costa Azul LNG export plant in early 2020, Reuters, Oct. 25, 2019
  22. ↑ 22.0 22.1 "Sempra's Energia Costa Azul LNG Said 'Prime Opportunity' for Rockies Gas Producers". NGI (Natural Gas Intelligence). May 28, 2021.{{cite web}}: CS1 maint: url-status (link)
  23. ↑ "ECA Liquefaction Project". Energía Costa Azul. Retrieved 2022-06-01.{{cite web}}: CS1 maint: url-status (link)
  24. ↑ Energía Costa Azul FID Still Set for Second Quarter Pending Export Approval, Natural Gas Intelligence, Apr. 24, 2020
  25. ↑ Clark Williams-Derry, "IEEFA update: Financial prospects falter for LNG projects", IEEFA, Apr. 24, 2020
  26. ↑ [1], Sempra LNG tweet, Jul. 9, 2020
  27. ↑ "Sempra still waiting for Mexican export permit for Costa Azul LNG". Reuters. August 5, 2020.
  28. ↑ Dave Graham, "Exclusive: Mexico tacks on request to Sempra unit's LNG export permit, say sources", Reuters, Aug. 21, 2020
  29. ↑ "ECA LNG - Sempra LNG". Sempra Infrastructure. Retrieved 2023-07-18.
  30. ↑ "TechnipFMC Receives Notice to Proceed for EPC Contract for Sempra LNG's and IEnova's Energía Costa Azul LNG Facility". TechnipFMC plc. November 17, 2020.{{cite web}}: CS1 maint: url-status (link)
  31. ↑ "Energía Costa Azul, S. de R.L. de C.V.- Docket No. 18-145-LNG" (PDF). US Department of Energy. December 20, 2022.{{cite web}}: CS1 maint: url-status (link)
  32. ↑ "U.S. allows Sempra to re-export LNG from Mexico". Reuters. December 20, 2022.{{cite web}}: CS1 maint: url-status (link)
  33. ↑ García, Karol (2023-07-25). "México comenzará exportación de gas natural licuado en el 2025". El Economista.{{cite web}}: CS1 maint: url-status (link)
  34. ↑ "Sempra's Energia Costa Azul LNG in Mexico Advancing to Summer 2025 Start". Natural Gas Intelligence. 2024-05-13.{{cite web}}: CS1 maint: url-status (link)
  35. ↑ "Policy Statement on Export Commencement Deadlines in Natural Gas Export Authorizations". US Department of Energy. 2024-07-17.{{cite web}}: CS1 maint: url-status (link)
  36. ↑ "ECA LNG". Sempra Infrastructure. Retrieved 2024-09-11.{{cite web}}: CS1 maint: url-status (link)
  37. ↑ "Energía Costa Azul Liquefaction Project | Information about the proposed liquefaction project at the site of the exisiting Energía Costa Azul facility in Baja California, Mexico". Energía Costa Azul. Retrieved 2022-03-15.{{cite web}}: CS1 maint: url-status (link)
  38. ↑ Sheky Espejo, Dyna Mariel, Sempra reaches FID for Energía Costa Azul LNG terminal, gains export permit, S&P Global, Nov. 17, 2020
  39. ↑ Energia Costa Azul LNG Terminal Phase 1, IJGlobal TRANSACTION DATA, Mar. 25, 2021
  40. ↑ "El alto de EEUU a proyectos de Gas Natural Licuado evidencia que el plan de México para exportarlo es peligroso y debe ser cancelado". Greenpeace México. 2024-01-26.{{cite web}}: CS1 maint: url-status (link)

Related GEM.wiki articles

External resources

External articles

Costa Azul LNG Terminal, Wikipedia, accessed November 2017

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