The joint venture of McDermott International and Chiyoda International -- which in 2014 was contracted to build the three-train Cameron LNG project in the US -- has agreed with the project owner the possibility of receiving "incentive bonus payments" for completing the second and third trains on time.
The agreement announced Friday is designed to "optimize the timing and cost-effectiveness of the remaining work" at Cameron LNG in Louisiana, McDermott said in a statement.
A joint venture of affiliates of US-based Sempra Energy, France's Total, Japan's Mitsui and a company jointly owned by Japan's Mitsubishi and NYK, Cameron LNG was hit by delays in late 2017 and early 2018.
The commissioning cargo from the first train of Cameron LNG was finally shipped at the end of May, and the partners are keen to stick to the latest timetable for completion of Trains 2 and 3.
According to the McDermott/Chiyoda JV (CCJV), the agreement with Cameron LNG:
provides the opportunity for incentive bonus payments for achieving construction and commissioning milestones on specified dates for Trains 2 and 3;
aligns the start dates for any schedule-related liquidated damages to be consistent with the current schedule;
and fully aligns and strengthens the commitment of CCJV to complete the project in accordance with the current schedule.
PROJECT ECONOMICS
Phase 1 of Cameron LNG includes the first three liquefaction trains, which will enable the export of approximately 12 million mt/year of LNG.
McDermott said the project was approximately 90% complete as of the end of the first quarter of 2019. "The company expects initial production from Trains 2 and 3 in the first quarter of 2020 and the second quarter of 2020, respectively," it said, a timeline confirmed by Sempra in a separate statement.
Sempra said the economics of the project would not be affected by the agreement with CCJV.
"We believe it is reasonable to expect that the overall economics of Cameron LNG will not significantly change as a result of this agreement," it said, adding that Sempra's projected share of full-year run-rate earnings from the first three trains at Cameron LNG continued to range between $400 million and $450 million annually.
The highly anticipated start-up of the first train at Cameron LNG marked the fourth such US project to begin operations since 2016, as the US looks to give shale gas producers more outlets from key basins along the Gulf Coast, in the Midcontinent region and in the Northeast.
Cameron LNG operates a tolling model under which the buyer of the LNG is responsible for securing its own feedgas and deciding where the cargoes are delivered.
