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    Annova LNG scraps South Texas project


Inability to sign offtake agreements thought to be main reason

by: Dale Lunan

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Natural Gas & LNG News, Americas, Liquefied Natural Gas (LNG), Corporate, Investments, News By Country, United States

Annova LNG scraps South Texas project

US LNG hopeful Annova LNG said March 22 it was scrapping its 6.5mn mt/yr project in South Texas, citing “changes to the global LNG market.”

One of three LNG export projects proposed for the Brownsville Ship Channel – Texas LNG and NextDecade’s Rio Grande LNG are the others – Annova had been unable to secure any offtake agreements for the project.

Its CEO, Omar Khayum, also left recently to take a vice-president position at Canada’s TC Energy, according to trade media reports.

“The entire Annova team is very grateful to the greater Brownsville community for having supported this project for several years,” the company said in a brief statement on its website. “We are in the process of notifying our supporters, commercial partners and regulatory agencies of this decision.”

The project was being jointly developed by its majority owner, Houston’s Exelon Corp, and minority owners Black & Veatch, Kiewit Energy Group and Canadian pipeline and midstream company Enbridge.

It was approved in 2019 by the US Federal Energy Regulatory Commission as an all-electric liquefaction facility and in January 2020 struck a 20-year precedent agreement with Enbridge for firm transportation service on and from Enbridge’s Valley Crossing Pipeline. The following month, the US Department of Energy approved Annova’s application to export up to 6.96mn mt/yr of LNG to countries without free-trade agreements with the US.

Of the other two Brownsville projects, only NextDecade’s 27mn mt/yr Rio Grande project has announced any offtake agreements – a 20-year agreement for 2mn mt/yr reached with Anglo-Dutch major Shell in 2019. In November 2020, talks with French utility Engie for a reported 2.9mn mt/yr were ended, apparently at the request of the French government, which holds a minority interest in Engie.

NextDecade continues to say it will make a final investment decision (FID) this year on Rio Grande.

And Texas LNG, a 4mn mt/yr project, says it expects FID early in 2022.