A bankruptcy court last Wednesday (July 24) approved a settlement agreement between Zachry Holdings and Golden Pass LNG that will allow ExxonMobil (XOM) and Qatar Energy to hire a new lead contractor for the project. The settlement gives the partners runway to finish construction, though East Daley has pushed back the expected start-up of Golden Pass following the legal tussle with Zachry.
The approval follows an emergency motion filed by Zachry on July 19 asking the bankruptcy court to approve the settlement with Golden Pass LNG and Chiyoda. The settlement allows Chiyoda to take over as the lead engineering, procurement and construction (EPC) contractor for Golden Pass LNG. Under the court order, Zachry has relinquished control as the lead manager of construction.
Zachry filed for Chapter 11 protection in May ’24 seeking a “structured exit” from Golden Pass LNG. The filing confirmed reports of labor issues at Golden Pass that put a 1H25 start-up target at risk. Along with Zachry, Golden Pass LNG has contracts with McDermott affiliate CB&I and Chiyoda for EPC services.
The settlement with Zachry is a positive development to jumpstart construction at Golden Pass. Nevertheless, East Daley has pushed back the expected start date of the Texas LNG facility after the two-month bankruptcy proceeding halted momentum. In the latest monthly Macro Supply & Demand Forecast, we now expect Golden Pass Train 1 to begin service in January 2026.
At the time of the work stoppage, Train 1 at Golden Pass LNG was 83% complete, according to a progress report filed with the Federal Energy Regulatory Commission (FERC). Train 2 and Train 3 were 46% and 31% complete, respectively. As part of the original EPC joint venture, Chiyoda was only responsible for the commissioning phase of Train 1. Under the settlement, the company will need to expand its scope of work and rehire thousands of laid-off workers, which we expect will take time.
Despite the expected delay at Golden Pass, the demand outlook remains strong for LNG in 2025. The figure shows EDA’s LNG project stack in Energy Data Studio. Several other LNG projects plan to start in the next year, including Cheniere Energy’s (LNG) Corpus Christi Phase 3 project and Venture Global’s Plaquemines LNG. – Oren Pilant Tickers: LNG, XOM.
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