Abu Dhabi has backed construction of a new $13bn liquefied natural gas plant in Louisiana. This comes in as concern over Middle East supply disruption has spurred a fresh wave of US energy development.
US energy group Caturus will on Friday unveil funding commitments for Commonwealth LNG. This project is a massive export facility in Cameron Parish, Louisiana. The facility boasts a production capacity of up to 9.5mn tonnes per year.
Caturus Raises $9.75 Billion for Louisiana Natural Gas Plant
The group has raised $9.75bn in project financing for construction of the plant. This comes in as a move that underlines how US fossil fuels have become a critical strategic asset since the Iran war closed the Strait of Hormuz. The Strait of Hormuz is a waterway through which a fifth of global oil and LNG flows.
“The biggest shift that has occurred in the market today (due to the war) is in LNG.” stated Ben Dell, managing partner of Kimmeridge and chair of Commonwealth LNG, in an interview.
“Buyers have to look for security of supply and they have to diversify, which has been driving them towards taking more US cargoes.”
Caturus is supported by US investment group Kimmeridge and Mubadala Energy, a subsidiary of an Abu Dhabi sovereign wealth fund and Canada’s CPP Investments. Additionally, Mubadala Energy contributed equity to the project financing for Commonwealth LNG along other institutions like CPP, BlackRock, Ares Management and EOC Partners.
Mubadala Energy’s investment is part of a surge of Middle East investment in US energy. This comes since Donald Trump promised to unleash “American energy dominance” in his second term in office. Also, the project was the first to get a vital export permit under the Trump administration. Furthermore, it has been granted other crucial approvals from US authorities.
Adnoc to Invest Billions of Dollars in US
Last month UAE state energy company Adnoc revealed plans of investing tens of billions of dollars in the US. This investment will be utilized in building a US natural gas business. Additionally, in November, Saudi Aramco announced 17 agreements with US companies with a potential value of more than $30bn.
Adnan Bu Fateem, chief operating officer of Mubadala Energy, revealed to the FT the company’s investment in Caturus and financing of Commonwealth LNG was not driven by the Iran war but was a “long-term investment in one of the world’s most dynamic energy markets”.
“We have noticed that the US is expanding its position as a global leader in LNG. So, it makes perfect sense for a company like Mubadala Energy to have a position on this market,” he said.
US LNG Export Set to Double by 2035
US LNG export capacity is forecast to double to 241mn tonnes by 2035, according to an analysis of projects that have reached final investment decisions, according to research firm Rapidan Energy Group.
Similar Projects in the US
Several other projects, including Delfin LNG and Texas LNG, are awaiting final investment decisions. These projects will push US capacity higher if they get approved.
Alex Munton, analyst at Rapidan, said: “The war in the Middle East has knocked Qatar and UAE’s proposed LNG expansions sideways and removed about 80mn tonnes from the market currently.”
“Russia is still sanctioned constrained, Australia is stagnating and Mozambique has challenges: so that leaves only the US to provide growth at scale.”
Commonwealth LNG has signed long-term supply deals with multiple customers including Aramco Trading, Glencore, Mercuria and Petronas, which are expected to generate $3bn in annual export revenues when operations begin in 2030.
Caturus’s decision to invest in Commonwealth LNG follows the announcement in March by rival Venture Global of an $8.6bn expansion of its CP2 LNG plant, also located in Cameron Parish.
US House of Representatives Speaker Mike Johnson, who represents Louisiana, said the project Commonwealth LNG would cement the state as the vanguard of “Republicans’ energy dominance agenda”.
Louisiana Natural Gas Plant Project Factsheet
Project Name: Commonwealth LNG Export Project
Developer: Caturus (Kimmeridge Energy Management Co.)
Location: Cameron Parish, Louisiana (U.S. Gulf Coast)
Total Estimated Cost: $13 Billion
Project Financing Secured: $9.75 Billion
Export Capacity: 9.5 Million Metric Tons Per Annum (MTPA)
Target Operational Date: 2030
Estimated Annual Revenue: $3 Billion
Key Partners and Financing Structure
- Caturus / Kimmeridge: Lead project developer and energy investment firm.
- Mubadala Energy: The Abu Dhabi sovereign wealth fund arm holds a 24.1% equity stake in Caturus. Also, it acted as a core equity participant in the financing.
- CPP Investments: Canada Pension Plan Investment Board injected $1.2 billion into the project. This elevated its total stake in Caturus to 31%.
