Aramco, Sempra subsidiaries reach non-binding, 20-year agreement over LNG offtake from Port Arthur

Through a non-binding Heads of Agreement (HoA), energy and chemicals company Aramco and energy infrastructure company Sempra have agreed to a 20-year sale and purchase agreement for liquefied natural gas (LNG) offtake from the Port Arthur LNG Phase 2 expansion project.

That would amount to 5 million tons per annum (Mtpa), care of the southeast Texas facility. Port Arthur LNG is a natural gas liquefaction and export terminal with direct access to the Gulf of Mexico. Its first phase is currently under construction, while its second phase will expand the site to include up to two trains capable of producing up to 13 Mtpa. Aramco could contribute up to 25 percent of the equity for that second phase.

“We are excited to take this next step into the LNG sector,” Nasir Al-Naimi, Aramco Upstream president, said. “As a potential strategic partner in the Port Arthur LNG Phase 2 project, Aramco is well placed to grow its gas portfolio with the aim of meeting the world’s growing need for lower-carbon sources of energy. This agreement is a major step in Aramco’s strategy to become a leading global LNG player.”

Sempa owns the facility, which it says could expand to a total of eight trains. If it does, it would position the site as a critical LNG export facility – one the company touted as important to the future of global energy security and resilience.

“The planned expansion of Port Arthur LNG would help facilitate the broad distribution of U.S. natural gas across global energy markets,” Jeffrey Martin, Sempra Chairman and CEO, said. “By expanding the global reach of the Port Arthur LNG facility, we have the opportunity to improve energy security while providing a lower-carbon alternative to coal for electricity production.”

The corporate pair signaled expectations to sign a binding LNG SPA and definitive equity agreements with terms similar to those in the HoA somewhere down the line. These would be subject to a number of conditions.

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