San Antonio's Zachry Holdings Settles Dispute with Golden Pass LNG, Eyes Bankruptcy Court Approval

After navigating tumultuous financial waters, San Antonio-based Zachry Holdings Inc. appears to be nearing the shore with a newfound settlement in its protracted dispute with Golden Pass LNG, concerning the development of a liquefied natural gas export terminal located in Southeast Texas. As reported by the San Antonio Express-News, the settlement terms will permit the beleaguered construction firm to relinquish its interest in the construction contracts of the Golden Pass project, thus allowing for the terminal's eventual completion.

Implicated in the dispute are factors such as COVID-19 pandemic setbacks, global supply chain obstacles, and the Russia-Ukraine conflict, which together caused serious financial strain on Zachry. This, ultimately led to a legal clash with Golden Pass LNG, after Zachry had acknowledged cost overruns requiring an additional $2.4 billion for project completion, and sought relief through Chapter 11. Notwithstanding, the terms of the settlement remain partially concealed, with the specific dollar amount that Zachry is set to receive from Golden Pass, redacted in the documents added to the court filings.

Now subject to the approval of the bankruptcy court, presided over by Judge Marvin Isgur, the settlement will also involve Zachry discontinuing its lawsuit against Golden Pass, as per a statement from Zachry’s chief restructuring officer, Moshin Meghji, which highlighted “The Settlement is the culmination of months of arm’s-length, hard-fought negotiations and discussions among the Parties and their respective Professionals, including through Court-ordered mediation,” obtained by the San Antonio Express-News. The release from both entities will include any potential claims against one another, signaling an end to the acrimony that dovetailed the construction project since its conception in 2019.

Additionally, the handover protocol extends to Zachry’s project-site equipment, which, according to the agreement, will be transferred without charge to Golden Pass LNG – an entity itself owned by a partnership between Exxon Mobil Corp. and QatarEnergy. The details align with the revelations of a July 19 court filing that, expressed an intent to avoid any further costly and time-consuming litigation over issues entangled in the $10 billion venture, according to a report by the Houston Business Journal. The upcoming hearing on Wednesday could potentially inscribe the final chapter of this contractual saga, setting a new course for the Golden Pass LNG project, now approximately 75% complete and poised under the new stewardship of Houston’s McDermott International and Japan’s Chiyoda International Corp.