Judge approves Zachry Holdings, Golden Pass LNG settlement, paving the way for project resumption
Rewrites throughout with background, context and judge and company comments
By Curtis Williams
HOUSTON, July 24 (Reuters) -A bankruptcy court approved a Zachry Holdings ZHII.UL and Golden Pass LNG settlement on Wednesday that will allow Exxon Mobil XOM.N and Qatar Energy QATPE.UL, the Golden Pass owners, to hire a new lead contractor to complete its LNG plant.
The order would speed construction of the 15 million metric ton per annum (MTPA) LNG plant by releasing Zachry as lead contractor on project. Chiyoda International Corp 6366.T will replace Zachry as the new lead engineering, procurement and construction contractor.
The project, at the Sabine Pass site of a former gas-import terminal that was converted to process natural gas for LNG exports, is one of two large U.S. LNG facilities whose startups were expected to significantly expand supplies from the world's top exporter of the superchilled fuel in the next 12 months.
Failure to approve the order could have left thousands unemployed and negatively impacted one of the largest global construction projects, Judge Marvin Isgur said in the bankruptcy court of the Southern District of Texas in Houston.
"I find that the proposed settlement is clear and convincing evidence... (and) is a compromise that should be approved," Isgur said in his ruling.
The order allows Golden Pass and its construction contractors McDermott and Chiyoda to ramp up site construction activities and progress its LNG terminal, Golden pass said in a statement.
"Going forward, we are focused on getting people back to work, including local workers and vendors, and progressing this critical energy project," Golden Pass added.
Under the order, Zachry Holdings will immediately give up control of the LNG project and cannot direct vendors or workers on what to do, court documents show.
Zachry last Friday filed an emergency motion with the bankruptcy court asking it to approve the settlement with Golden Pass LNG, which would allow it to emerge from bankruptcy.
Judge Isgur said he was happy the parties came to a settlement because there was a real risk to the survival of Zachry given the size of the claims.
"The settlement resolves all of the issues we set out to address regarding the Golden Pass LNG project when we initiated our restructuring," said John Zachry, chairman and CEO of Zachry Holdings.
In filing for Chapter 11 bankruptcy protection in May, Zachry said the Golden Pass project, known as GPX, was at least $2.4 billion over the original budget.
Reporting by Curtis Williams in Houston
Editing by Bill Berkrot
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