Aramco And Sempra Ink Landmark 20-Year LNG Agreement For Port Arthur Project

Aramco and Sempra have announced a non-binding heads of agreement (HoA) for a 20-year sale and purchase agreement (SPA). This deal involves the offtake of 5.0 million tons per annum (Mtpa) of liquefied natural gas (LNG) from the Port Arthur LNG Phase 2 expansion project. Aramco's participation in the project-level equity of Phase 2 is set at 25%.

The Port Arthur LNG facility, located in southeast Texas, has direct access to the Gulf of Mexico. The Phase 1 project, currently under construction, includes trains 1 and 2, two LNG storage tanks, and associated facilities. The Phase 2 expansion aims to add up to two more trains, boosting production capacity to 13 million tons annually.

"We are excited to take this next step into the LNG sector," said Aramco upstream president Nasir Al-Naimi. "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."

Sempra chairman and chief executive Jeffrey Martin stated, "The planned expansion of Port Arthur LNG would help facilitate the broad distribution of U.S. natural gas across global energy markets. By expanding the Port Arthur LNG facility's global reach, we can improve energy security while providing a lower-carbon alternative to coal for electricity production."

Sempra Infrastructure’s flagship Port Arthur Energy Hub includes various projects aimed at addressing rising demand for lower-carbon fuels. One such initiative is the proposed Titan Carbon Sequestration project. These efforts are part of Sempra’s broader strategy to reduce carbon intensity and enhance global energy security.

The HoA anticipates that Aramco and Sempra will finalize binding SPA and definitive equity agreements with terms similar to those outlined in the HoA. These agreements will be subject to several conditions before becoming effective.

Port Arthur LNG has the potential to expand further, with plans for up to eight trains in total. This would position it as one of the world's largest LNG export facilities, significantly enhancing its role in global energy security and resilience.

The collaboration between Aramco and Sempra marks a significant step towards meeting global energy needs with lower-carbon solutions. The expansion of Port Arthur LNG is expected to play a crucial role in this transition.

With inputs from SPA