O'Melveny Insights 2023

29 Construction Cost Increases May Delay Progress. The front runners among the US LNG project developers have started refreshing their construction cost estimates and finalizing engineering, procurement, and construction (EPC) contracts. As they do so, higher construction costs could affect contract negotiations with LNG buyers and ultimately delay development. For its Port Arthur LNG project, Sempra Infrastructure recently announced finalized contracts of US$10.5 billion for 13.5 million tonnes of annual LNG production capacity. That is about US$778 per tonne of annual capacity, up about 6% from the US$733 per tonne of annual capacity that Sempra paid for its firstwave US LNG project, Cameron LNG. US LNG Projects Achieved Record Low Per-Unit Build Costs of Liquefaction Capacity LNG Projects, $/tpa*, 2014-18 *Tpa stands for tonne of annual liquefaction capacity. Gorgon Prelude FLNG Wheatstone Ichthys Queenland Curtis PNG Yamal Donggi-Senoro Pacific LNG Gladstone Angola LNG Tangguh Expansion Corpus Christi Phase 1 Petronas PFLNG1 Sabine Pass Train 5 Elba Island Petronas PFLNG2 Freeport Cameron LNG Cove Point Corpus Christi Phase 2 Bintulu Train 9 Caribbean FLNG Golar FLNG Sabine Pass Trains 1-4 550 600 600 625 667 710 733 799 825 832 884 968 1044 1053 1154 1291 1300 1305 1311 1349 1412 1929 1987 2000 2106 Australia Rest of the world US Source: Oxford Institute for Energy Studies