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McDermott, Sempra reach agreement on Cameron LNG

Delayed project agreement "provides the opportunity for incentive bonus payments" for reaching date targets

US engineering giant McDermott International said it had reached an agreement with Sempra Energy for the delayed Cameron liquefied natural gas export project in Louisiana.

Construction delays have pushed back the facility’s Phase 1 start-up date by more than a year, although the project was recently granted a deadline extension by the US Federal Energy Regulatory Commission to place the facility into service by September 2020.

The agreement, McDermott said along with its joint venture partner Chiyoda, "provides the opportunity for incentive bonus payments for achieving construction and commissioning milestones on specified dates for Trains 2 and 3."

The partners have provided engineering, procurement and construction for the project.

McDermott also said the agreement aligned start dates “for any schedule-related liquidated damages to be consistent with the current schedule” and strengthens the commitment of the joint venture partners to complete the project according to the current schedule.

Cameron LNG ships first commissioning cargo

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Sempra confirmed the agreement for what it says are "performance-based commercial considerations related to the construction and commissioning schedule that further aligns the interests of all parties around safe, timely completion" of the first project phase.

"We believe it is reasonable to expect that the overall economics of Cameron LNG will not significantly change as a result of this agreement. Sempra Energy's projected share of full-year run-rate earnings from the first three trains at Cameron LNG continues to range between $400 million and $450 million annually,” Sempra said in a statement.

The three-train facility operated by Sempra was expected to come online in early 2018, and is planned to have the capacity to export 12 million tonnes per annum of LNG, or about 1.7 billion cubic feet of natural gas per day. Cameron LNG shipped its first commissioning cargo in late May.

"Over the past year, we have further strengthened our relationship with Cameron LNG and our leadership, oversight, execution, forecasting and reporting on the project. In the last few months, the joint venture project team has made tremendous progress, including first liquid and first cargo from Train 1," McDermott’s senior vice president of projects Samik Mukherjee said in a statement.

The final commissioning phase is currently underway at Train 1 while Train 2 and Train 3 are still under construction, according to Ferc. The facility is expected to start commercial operations in mid-2019 after it receives Ferc authorisation.

Cameron LNG deadline extended

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McDermott has said the project is around 90% complete as of the end of the first quarter of 2019, with initial production from Train 2 expected in the first quarter of 2020 and from Train 3 scheduled for the second quarter 2020.

Cameron LNG is a development led by Sempra and including LNG players GDF Suez, Mitsui and Japan LNG Investment — itself a joint venture between Mitsubishi and Nippon Yusen Kabashiki Kaisha.

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