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Pivot to the South: LNG Plants Under Development by Sempra Energy in Louisiana and Mexico
11/18/2021
Sempra Energy, one of the key U.S. gas exporters, announced earlier in the month that it will continue to build liquefied natural gas (LNG) export plants in Louisiana and Mexico, while also continuing to develop Phase 1 of the Costa Azul LNG export plant in Mexico.
At the company's earnings call, Justin Bird, CEO of Sempra Infrastructure, assured that Costa Azul would produce its first LNG by the end of 2024. After completion, It is expected that Costa Azul will produce approximately 3.3 million tonnes of LNG per annum.
In addition, Sempra would develop the 4.0-mmtpa Vista Pacifico LNG export facility located next to the company's Terminal for Refined Products in Topolobampo.
A slated pipeline connecting Vista Pacifico to two existing grids would simultaneously provide gas from the Permian basin in Texas and New Mexico to Asian markets that are seeing a rapid increase in LNG demand.
Vista Pacifico is being built in conjunction with the Energia Costa Azul (ECA) LNG project currently under construction in Baja California, for which the company has been awarded permits by the U.S. Energy Department to export to countries with an FTA, approval for non-FTA countries is expected in the coming months.
A mid-size LNG facility, Vista Pacifico would be supplied with lower-cost natural gas from the Permian Basin to export to high-demand Asian markets. Business operations associated with it will fall under the Sempra Infrastructure business platform.
Sempra Energy officials also assured that they will continue to be focused on putting together a roughly 6- million ton-per-annum fourth train at Cameron LNG, as well as optimizing operation at the 15- million ton-per-annum, three-train facility in Louisiana.
It was mentioned that both the Vista Pacifico project and the Cameron expansion might be sanctioned before the Port Arthur LNG project in Texas.
With regards to LNG-related inquiries from customers, the company sees a real increase in requests directed not only from Asia but from Europe and South America as well. In line with this, Sempra's long-term LNG development forecast suggests that the demand for LNG will grow between mid-to-high single digits.
Once marketing begins, Sempra's management expects Vista Pacifico to be oversubscribed.
Additionally, according to the company's analytics, there's a tremendous amount of recognition about the role of natural gas and specifically, LNG in Europe at the moment. And there's certainly a new risk premium being assigned to pipeline gas. This sentiment also plays a favorable role in the company's outlook.
In particular, October saw prices for natural gas in Europe and Asia reach record highs for the first time in a while. Delays in pipeline gas flowing from Russia is one of the reasons for such hasty change among the EU-nations politics as well as the reason behind boosted gas fees, as cited by the company's CEO.
Therefore Sempra Energy's comfortable position is a direct result of good market decisions, given that the company's capacity to deliver energy directly into Europe and Asia edges out most of its direct competitors in respective regions.
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Welcome 2024: A Look Back at 2023 Top Oil and Gas Sector Deals
2023 was quite a year for the oil and gas sector, with some big deals making the news. In the US, giants like ExxonMobil and Chevron grabbed headlines with their plans to acquire companies like Pioneer and Hess. Internationally, ADNOC wasn't left behind, expanding its reach as well. As we ring in the new year, let's recap the biggest oil and gas deals of 2023.
13 years is not long enough: Glencore and Cheniere Sign Long-Term LNG Deal
Texas Cheniere and Swiss Glencore had entered into a free-on-board agreement for approximately 0.8 million tonnes of LNG per annum, starting in April 2023 for 13 consecutive years. This SPA demonstrates the commercial momentum Cheniere has been enjoying and marks an important milestone, as the company lays the groundwork for a final investment decision on Corpus Christi Stage 3, which is expected to occur next year.
The U.S. has overtaken Saudi Arabia and Russia to become the world's largest oil and gas producer. In 2024, America's oil output has surpassed last year's record by 1.4%, reaching new heights. Even as oil-producing countries in the Middle East cut back, the U.S. continued to ramp up production after a downturn in 2020, establishing itself as a dominant force in the global market. In terms of numbers, U.S. oil production jumped from an average of 2.93 million barrels per day in 2023 to 13.12 million barrels per day in 2024, marking a significant 7.1% increase.
Kinetik Holdings recently announced a series of transactions in the energy sector. They struck a deal to buy Durango Permian infrastructure for $765 million. At the same time, they're selling their 16% share in the Gulf Coast Express Pipeline to ArcLight Capital Partners for $540 million. The total purchase cost includes $510 million in cash paid immediately and an additional $30 million that will be paid later, depending on whether they decide to expand further.
Recently, the Permian has seen significant acquisitions: Exxon Mobil purchased Pioneer Natural Resources for about $60 billion. Diamondback Energy's $26 billion deal to acquire Endeavor Energy Resources is currently on hold due to requests from the U.S. Federal Trade Commission. Occidental’s acquisition of CrownRock for $12 billion in the Midland.