Judge approves Zachry Holdings, Golden Pass LNG settlement, paving the way for project resumption (updated)

Chiyoda

24/07/2024 22:04

(Rewrites throughout with background, context and judge and
company comments)
    By Curtis Williams
       HOUSTON, July 24 (Reuters) - A bankruptcy court approved
a Zachry Holdings  ZHII.UL  and Golden Pass LNG settlement on
Wednesday that will allow Exxon Mobil  XOM.N  and Qatar Energy
 QATPE.UL , the Golden Pass owners, to hire a new lead
contractor to complete its LNG plant.
    The order would speed construction of the 15 million metric
ton per annum (MTPA) LNG plant by releasing Zachry as lead
contractor on project. Chiyoda International Corp  6366.T  will
replace Zachry as the new lead engineering, procurement and
construction contractor.    
    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.
    Failure to approve the order could have left thousands
unemployed and negatively impacted one of the largest global
construction projects, Judge Marvin Isgur said in the bankruptcy
court of the Southern District of Texas in Houston.
    "I find that the proposed settlement is clear and convincing
evidence... (and) is a compromise that should be approved," 
Isgur said in his ruling.  
    The order allows Golden Pass and its construction
contractors McDermott and Chiyoda to ramp up site construction
activities and progress its LNG terminal, Golden pass said in a
statement.
    "Going forward, we are focused on getting people back to
work, including local workers and vendors, and progressing this
critical energy project," Golden Pass added.
    Under the order, Zachry Holdings will immediately give up
control of the LNG project and cannot direct vendors or workers
on what to do, court documents show.
    Zachry last Friday filed an emergency motion with the
bankruptcy court asking it to approve the settlement with Golden
Pass LNG, which would allow it to emerge from bankruptcy.
    Judge Isgur said he was happy the parties came to a
settlement because there was a real risk to the survival of
Zachry given the size of the claims.
    "The settlement resolves all of the issues we set out to
address regarding the Golden Pass LNG project when we initiated
our restructuring," said John Zachry, chairman and CEO of Zachry
Holdings.
    In filing for Chapter 11 bankruptcy protection in May,
Zachry said the Golden Pass project, known as GPX, was at least
$2.4 billion over the original budget.
       

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