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Oil report

Sempra to go ahead with Costa Azul LNG project amid virus concerns

March 24 (Reuters) - Sempra Energy said on Tuesday it will go forward with its plan to build the first phase of the Costa Azul liquefied natural gas (LNG) export plant in Mexico.

Sempra said it is targeting a final investment decision in the second quarter of 2020.

The decision comes at time when most of the LNG industry is cutting back on growth as global demand for gas is expected to decline due to the coronavirus outbreak.

Last month, Sempra said it planned to make a final investment decision to build two LNG export plants in 2020 - Costa Azul in Baja California in the first quarter and Port Arthur in Texas in the third quarter.

At Costa Azul, Sempra said Energia Costa Azul LNG has non-binding 20-year agreements with units of France’s Total SA as well as Japan’s Mitsui & Co and Tokyo Gas Co Ltd to buy about 0.8 million tonnes per annum (MTPA) of LNG each.

The first phase of Costa Azul is designed to have one liquefaction train that can produce about 2.4 MTPA or 0.32 billion cubic feet per day (bcfd) of natural gas.

Sempra said Costa Azul could make its first LNG deliveries in 2023. The project will be built at the existing Costa Azul LNG import plant, which entered service in 2008 and has the capacity to regasify up to 1 bcfd.

At Port Arthur, Sempra said Port Arthur LNG is in talks with units of Saudi Arabian Oil Co (Aramco) to buy 5 MTPA of LNG and invest 25% equity, and with Polish Oil & Gas Co (PGNiG) to buy 2 MTPA of LNG.

The initial phase of the Port Arthur project is expected to include two liquefaction trains that can export about 11 MTPA of LNG.

Earlier this month, Train 2 at the 15-MTPA Cameron LNG plant in Louisiana entered commercial service. Train 3 is expected to enter commercial service in the third quarter, the company has said.

Sempra has said it aims to develop projects capable of delivering 45 MTPA of LNG to the world.

In addition to the first phases of Costa Azul, Cameron and Port Arthur, Sempra is developing a second two-train phase at Costa Azul, a second 10-MTPA two-train phase at Cameron and a second 11-MTPA two-train phase at Port Arthur.

Reporting by Scott DiSavino and Shradha Singh in Bengaluru; Editing by Ramakrishnan M.

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