HOUSTON – Work to complete the QatarEnergy and Exxon Mobil (NYSE: XOM) $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, 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. The first LNG output from the 15 million metric tons 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 US 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 US 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.
(Source: ReutersReuters)
Exxon Mobil NYSE: XOM QatarEnergy
