Sempra (NYSE:SRE) is reportedly revisiting its selection of Bechtel Energy to build the Cameron LNG expansion project in Louisiana owing to higher construction costs.

The Sempra-Bechtel pricing dispute reflects a broader increase in construction and labor costs, which has affected several U.S. LNG export projects under development and is threatening to delay others further, reported Reuters.

The report cited one of the people familiar with the matter, saying that Sempra “has gone back out for an EPC (engineering procurement and construction) contractor for its expansion project.” 

“High demand for skilled labor for plant construction is causing costs to rise and making some projects too expensive to build.”

Paul Marsden, the president of Bechtel Energy, told Reuters, “There’s no doubt that the whole industry is feeling inflationary pressures. We need to actively forecast and manage labor availability and supply chain like never before.”

Notably, Sempra LNG is constructing facilities in Mexico and Texas and aiding the expansion of the Cameron facility.

As per the report, Cameron LNG Phase 2 is a venture between affiliates of Sempra LNG, TotalEnergies SE (NYSE:TTE), Mitsui, and Japan LNG Investment LLC. 

The company aims to expand the capacity of the three trains at its 12 million metric tons per annum (MTPA) facility and add a fourth.

This month, Sempra Energy reported first-quarter adjusted EPS of $1.34, which was in line with the consensus, and sales of $3.64 billion missed the consensus of $5.58 billion. 

Investors can gain exposure to the stock via SPDR Select Sector Fund – Utilities (NYSE:XLU) and Virtus Reaves Utilities ETF (NYSE:UTES).

Price Action: SRE shares are down 0.36% at $76.90 premarket at the last check Monday.

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