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LNG World Shipping

Total caps busy LNG month with Sempra deal

Tue 06 Nov 2018 by Mike Corkhill

Total caps busy LNG month with Sempra deal
On delivery in March 2018, Gaslog Hong Kong joined the Total charter fleet

Total of France has signed a memorandum of understanding (MOU) with San Diego-based Sempra Energy which establishes the basis for co-operation in developing two North American LNG export projects.

Under the terms of the preliminary deal the two parties will work together to bring Sempra’s Cameron Phase 2 and Energía Costa Azul (ECA) liquefaction schemes to fruition. The MOU’s framework would enable Total to contract up to 9 mta of LNG offtake from the two projects.

Sempra originally built Cameron LNG and ECA LNG as LNG import terminals. The shale gas bonanza in the US effectively rendered the LNG-receiving role of the facilities redundant and has incentivised the construction of liquefaction plants at the sites to provide the terminals with a bi-directional capability and enable LNG exports.

Construction work on Phase 1 of the Cameron liquefaction project in Hackberry, Louisiana, providing three 4.5-mta trains, has been underway for several years, and loading the inaugural Train 1 LNG cargo is imminent. Sempra Energy stated that all three trains will be operational by the end of 2019.

Cameron LNG’s Phase 2 project will provide an additional two 4.5-mta trains. The ECA terminal at Ensenada in the Mexican state of Baja California, near the US border, has lain largely idle since commissioning as an import facility in April 2008. Sempra’s liquefaction plans for the site call for a small-scale 2.5-mta train initially and adding 12 mta of export capacity in a second phase of the project at a later date.

Although Sempra is yet to take a final investment decision on either the Cameron Phase 2 or the ECA schemes, the involvement of Total supports the likelihood of positive outcomes. The energy major is already a partner in the Cameron LNG Phase 1 joint venture, with a 16.6% stake.

A shareholder in 12 liquefaction facilities that currently generate 25% of global LNG output, Total is the world’s second-largest publicly traded LNG player. Acquiring Engie’s LNG interests, including its LNG carrier fleet, in 2017 helped the company build its inhouse portfolio of LNG production capacity to 15.6 mta.

Outside the Cameron Phase 2 and ECA projects, Total is involved with other new LNG export schemes that will increase its liquefaction capacity portfolio to 23 mta by 2020. The company will also have a worldwide LNG trading contracts portfolio of 28 mta and a regasification terminal capacity of 18 mta.

As a result of newbuilding charter parties concluded earlier in 2018, the Total charter fleet will stand at 18 LNG carriers by 2020, of which two will be floating storage and regasification units.

In October 2018, Total extended the terms of its decade-old sales and purchase agreement (SPA) with CNOOC of China. The contract volume has been increased from 1 to 1.5 mta while the duration of the SPA has been boosted from 15 to 20 years.

Also during the month, the French major and India’s Adani Group agreed to jointly develop energy business opportunities, including in the LNG field, in the Indian market. Adani is involved with the Mundra and Dhamra LNG import projects, and outside investors are being sought for both schemes.

Both Mundra and Dhamra are 5-mta schemes. Although Dhamra, on India’s east coast, is not due onstream until late 2021, the Mundra terminal, in Gujurat, is due to receive a commissioning cargo in the coming months.

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