ABU DHABI: Kimmeridge Energy Management Co is moving forward with plans to build a US$13bil liquefied natural gas (LNG) export plant on the United States gulf coast after securing backing from an Abu Dhabi sovereign fund.
Mubadala Energy will provide equity financing for the project in Louisiana as part of a US$9.75bil funding package, clearing the way for construction to begin, according to a statement.
The plant is scheduled to begin operations in 2030.
Mubadala Energy’s investment in the development, named Commonwealth LNG, is the latest sign that Middle East investors are pushing ahead with deal-making, even as Iran strikes energy and infrastructure assets across the Persian Gulf region.
The UAE has also reaffirmed its plans to invest more than US$1 trillion in the United States, despite concerns that outlays could be impacted by the conflict in the region.
The project is the second ground-up LNG development to make a final investment decision since US President Donald Trump lifted a ban on new export terminals when he took office nearly 16 months ago.
It comes as the effective closure of the Strait of Hormuz has choked off about one-fifth of the world’s LNG supply, driving prices higher and creating potential opportunities for exporters elsewhere.
The export plant will help cement the US as the world’s largest LNG exporter at a time when global demand for the fuel is forecast to grow more than 35% by 2030.
Nations in Asia and elsewhere are expected to turn more to gas to support economic growth and shift away from dirtier coal.
LNG developers in the United States are racing to meet rising global demand.
More than six multi-billion-dollar projects are underway to build or expand export terminals.
Mubadala Energy already owned a 24% stake in Caturus, the company founded by Kimmeridge to develop the LNG project.
Other investors in the LNG terminal include EOC Partners, BlackRock Inc, Canada Pension Plan Investment Board and a fund managed by Ares.
Catarus today produces about one billion cubic feet per day of natural gas in the Eagle Ford and Haynesville shale basins, Kimmeridge Managing Partner Ben Dell said.
Production is expected to grow further to 1.5 billion cubic feet per day by the time Commonwealth comes online.
“One of the things that’s unique about LNG is when there’s demand issues or supply issues, there’s no elasticity – so prices go exponential,” Dell said.
Kimmeridge, based in Manhattan, primarily focuses on investing in US oil and gas drillers. It has raised US$6.5bil in commitments from limited partners since opening in 2012.
The firm’s co-founder, Ben Dell, is among the US energy sector’s most outspoken investors.
Building a massive export terminal would be new for Kimmeridge.
Yet, while LNG projects require billions of dollars and highly complex engineering, the sector hasn’t been the exclusive domain of energy supermajors.
One of the industry’s pioneers, Charif Souki, was a restaurateur before founding Cheniere Energy Inc, which is now the largest US LNG company by market value.
The second-largest, Venture Global Inc, was founded by a financier and lawyer who were largely outsiders in the energy sector. — Bloomberg
