Filling global demand: Sempra, Aramco move toward Port Arthur LNG deal
Published 6:00 am Thursday, May 23, 2019
Sempra LNG and Aramco Services Co. have signed a non-binding agreement that would secure the Saudi company as an investor in the Port Arthur LNG project and as a purchaser of its liquefied natural gas product for 20 years.
The Heads of Agreement deal anticipates purchase by Aramco Services of 5 million tonnes per annum of LNG offtake from Phase 1 of the Port Arthur LNG export project under development. It also includes the negotiation and finalization of a 25% equity investment in Phase 1 of Port Arthur LNG.
“The agreement with Sempra LNG is a major step forward in Saudi Aramco’s long-term strategy to become a leading global LNG player,” said Amin Nasser, Saudi Aramco’s CEO and president. “With global demand for LNG expected to grow by around 4% per year, and likely to exceed 500 million metric tons a year by 2035, we see significant opportunities in this market and we will continue to pursue strategic partnerships which enable us to meet rising global demand for LNG.”
“At Sempra Energy, we are developing one of the largest LNG export infrastructure portfolios in North America, with an eye towards connecting millions of consumers to cleaner, more reliable energy sources,” Jeffrey W. Martin, chairman and CEO of Sempra Energy, said. “We are pleased to partner with affiliates of Saudi Aramco, the largest oil and gas company in the world, to advance the development of Sempra LNG’s natural gas liquefaction facility in
Texas and enable the export of American natural gas to global markets.”
The proposed Port Arthur LNG Phase 1 project is expected to include two liquefaction trains, up to three LNG storage tanks and associated facilities that should enable the export of about 11 Mtpa of LNG on a long-term basis. Port Arthur LNG could be one of the largest LNG export projects in North America, with potential expansion capabilities up to eight liquefaction trains or approximately 45 Mtpa of capacity.
Earlier this month, the U.S. Department of Energy issued Port Arthur LNG’s
authorization to export domestically produced natural gas to countries that do not have a free trade agreement with the U.S. Last month, Port Arthur LNG and its affiliates received authorization from the Federal Energy Regulatory Commission to site, construct and operate the liquefaction export facility and related natural gas pipelines. It would likely be built on land owned by Sempra on Highway 87, toward Sabine Pass.
Sempra previously signed an agreement with Polish Oil & Gas Co. and a memorandum of understanding with Korea Gas Corp. related to Port Arthur LNG.
Port Arthur LNG is one of Sempra LNG’s five strategically located LNG development opportunities in North America and is a component of Sempra LNG’s goal of delivering 45 Mtpa of clean natural gas to the global LNG market.
Among the five is Cameron LNG, in neighboring Cameron Parish, Louisiana. President Trump visited there last week when the plant became operational.
Development of Sempra Energy’s LNG export projects is contingent upon obtaining additional customer commitments, completing the required commercial agreements, securing all necessary permits, obtaining financing, incentives and other factors, and reaching a final investment decision, the company said.