Golden Pass LNG construction could return to normal speed after settlement

Chiyoda

22/07/2024 20:31

By Curtis Williams
       HOUSTON, July 22 (Reuters) - Work to complete the
QatarEnergy  QATPE.UL  and Exxon Mobil  XOM.N  $11 billion
liquefied natural gas project in Texas could speed up following
a settlement agreement allowing the joint venture to choose a
new contractor to take over the development, according to court
documents.
    The project's original main contractor, Zachry
Holdings ZHII.UL , filed for Chapter 11 bankruptcy protection in
March, saying the Golden Pass project - known as GPX - was at
least $2.4 billion over the original budget.
    A settlement with Zachry for the company to step aside is
expected to put an end to the standoff that delayed the project.
First LNG output from the 15 million metric ton per annum (MTPA)
project is now expected in 2025, rather than the end of this
year as originally planned.
    The project, at the Sabine Pass site of a former gas-import
terminal that was converted to process natural gas for LNG
exports, is one of two large U.S. LNG facilities whose startups
were expected to significantly expand supplies from the world's
top exporter of the superchilled fuel in the next 12 months.
    Zachry on Friday filed an emergency motion with the U.S.
bankruptcy court for the Southern District of Texas in Houston
asking it to approve a settlement with Golden Pass LNG and
Chiyoda International Corp, expected to lead to Zachary emerging
from bankruptcy. 
    The agreement will allow Chiyoda to take over the project as
the lead contractor for engineering, procurement and
construction, and for paying vendors.
    "The settlement will facilitate the completion of the GPX
Project and create a path for the debtors (Zachry) to emerge
from bankruptcy," the court document said.
    The parties have managed to keep lines of communication
open, progressing toward a consensual resolution of the issues,
Zachry said in its filing.
    Zachry said it would not comment until after the settlement
approval hearing, scheduled for Wednesday.
    The proposed deal is expected to allow direct payment of
vendors' approved claims by Golden Pass, subject to a cap, with
Zachry agreeing to pay the balance of any such allowed claims. 
    It also allows for the immediate transition of work from
Zachry to joint venture partners, allowing them to rehire
workers, advance scope, and complete the project, the court
document showed.

    

 (Reporting by Curtis Williams in Houston; Editing by Bill
Berkrot)
 ((Curtis.Williams@thomsonreuters.com; +1 346 324 7560;))