August 09, 2024 [Market Screener]- Sempra Infrastructure’s Energia Costa Azul LNG export project in Mexico has been further delayed by labor and productivity challenges that will boost the cost of the project, the company said on Tuesday.

Sempra Infrastructure, a unit of the utility giant Sempra, has been building the first phase, a 3.5 million-metric ton per annum (MTPA) liquefied natural gas train for the LNG export project in Mexico. The facility will give it direct access from Mexico’s Pacific coast to feed LNG markets in Asia.

“We are actively engaged with our contractor to advance the project, and we’ll see increased features for the projects in the form of additional carrying costs,” Sempra Chief Financial Officer Karen Sedgwick said on an earnings call.

She did not give a new cost estimate. In 2020 the company said it planned to spend about $2 billion for the first phase.

She said the higher construction costs are unlikely to hurt the project’s economics as there will be lower estimated commissioning rent based on forward price curves.

“Despite the delay potential changes in capital, we still expect to maintain strong integrated financial returns with our original forecast at the time that we took FID in 2020,” Sedgwick told the earnings call.

She cited factors including optimization opportunities, stronger LNG demand over the long term and inflation protection within the SPA.

First LNG from the export project is set for 2025, with contracted customers receiving their supplies in spring 2026 due to contractor labor retention and productivity issues, the company said in its second quarter earnings report.

Of the 3.5 MTPA in phase 1 of the project, 2.4 MTPA of that capacity has been contracted to France’s TotalEnergies and Japanese trading house Mitsui & Co, according to the company’s website.

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