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Sempra LNG and Aramco Services Co. sign agreement for Port Arthur LNG

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LNG Industry,

Sempra Energy has announced that its subsidiary, Sempra LNG, has signed an interim project participation agreement (IPPA) with Saudi Aramco subsidiary, Aramco Services Co., for the Port Arthur LNG export project under development in Jefferson County, Texas, US.

The IPPA follows a heads of agreement (HoA) that was signed in May last year for the purchase of 5 million tpy of LNG and a 25% equity investment in the Port Arthur LNG project.

Jeffrey W. Martin, Chairman and CEO of Sempra Energy, said: “Today’s announcement is a reflection of the growing alignment between our companies' interest in the overall success of the Port Arthur LNG project.

“We have a tremendous amount of respect for Saudi Aramco and its leadership team and we are pleased we can support their success in the global natural gas markets.”

Amin H. Nasser, Saudi Aramco’s President and CEO, added: “The global demand growth for LNG is expected to continue in the coming years, and we see significant opportunities in this market. This agreement with Sempra Energy is another step forward for Saudi Aramco’s long-term gas strategy, and towards becoming the global leading integrated energy and chemicals company.”

According to the statement, the initial phase of the Port Arthur LNG project is fully permitted and it is expected to include two liquefaction trains, up to three LNG storage tanks and associated facilities to enable the export of approximately 11 million tpy of LNG on a long-term basis. Earlier this year, Sempra LNG reportedly initiated the Federal Energy Regulatory Commission (FERC) pre-filing review for a subsequent potential expansion of the proposed project that would add two additional liquefaction trains for a total export capacity of approximately 22 million tpy of LNG.

Martin added: “Port Arthur LNG is expected to play a critical role in helping shape the future of global energy trade.

“This multibillion-dollar initiative is among the largest LNG projects in development anywhere in the world and is expected to deliver a cleaner energy supply to foreign markets, while creating important, high-skilled jobs right here at home.”

Sempra Energy claims that the definitive agreements in the Port Arthur LNG export project remain subject to finalisation and corporate approvals by each party in its sole discretion before they are executed. In addition to this, each party’s ultimate participation in the Port Arthur LNG export project also remains subject to the execution of related agreements and the fulfillment or waiver of certain conditions precedent contemplated by these agreements, including the condition that each party shall have taken a final investment decision (FID) with respect to its investment in the project at its sole discretion. The IPPA sets forth certain mechanisms for the parties to work towards these and other pre-FID activities.

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