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Port Arthur LNG and PGNiG enter 20-year LNG sale and purchase agreement

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LNG Industry,

Port Arthur LNG LLC, a subsidiary of Sempra Energy, and Polish Oil & Gas Co. (PGNiG) have announced that they have entered into a definitive 20-year sale and purchase agreement (SPA) for LNG from the Port Arthur LNG export facility being developed in Jefferson County, Texas, US.

Sempra Energy claims that this signals an important milestone as the company seeks to reach its long-term goal of exporting 45 million tpy of LNG from North America.

US Secretary of Energy, Rick Perry, said: “This agreement marks an important step toward Poland’s energy independence and security.

“As demonstrated with the launch of the Strategic Dialogue on Energy in Poland last month, the Trump Administration remains committed to increasing energy diversity, advancing energy security, strengthening national security, and creating a future of prosperity and opportunity in Poland and throughout the region.”

Jeffrey W. Martin, Chairman and CEO of Sempra Energy, added: “This agreement with PGNiG represents an important expansion of our portfolio of contracts for LNG exports and major step forward in the development of our Port Arthur LNG project.

“Last month, we began the commissioning phase of our Cameron LNG liquefaction-export facility in Louisiana. This agreement, along with the great progress on Cameron LNG, continues to validate our growth strategy as we advance our vision to become North America’s premier energy infrastructure company.”

Piotr Wozniak, President of the management board of PGNiG, added: “Our activities show that we consistently implement our strategy.

“Another long-term contract not only allows us to develop LNG portfolio with a view to delivering to Poland, but it gives us, in the near future, the possibility of trading in LNG purchased on a global scale. I am glad that Sempra Energy is among our American partners. I am convinced that we will have good long-term cooperation.”

In the statement, Sempra claims that, although the financial terms have not been disclosed, the agreement is for the sale and purchase of 2 million tpy, or approximately 2.7 billion m3/yr (after regasification). This is enough gas to meet approximately 15% of Poland’s daily requirements. The agreement is subject to various conditions precedent, including Port Arthur LNG taking a final investment decision (FID).

Under the terms of the SPA, LNG purchases from the project will be made on a free-on-board basis, with PGNiG responsible for shipping the LNG from the Port Arthur terminal to the final destination. Port Arthur LNG will reportedly be responsible for managing gas pipeline transportation, liquefaction processing and cargo loading, providing PGNiG with flexibility in terms of cargo management. The Polish company then plans to deliver cargoes to domestic customers in Poland, or trade LNG on the global market, once operations begin.

According to the statement, the final environmental impact statement is scheduled to be issued by the Federal Energy Regulatory Commission (FERC) for the Port Arthur liquefaction facility in January 2019. Bechtel was selected earlier this year to serve as the engineering, procurement, construction and commissioning contractor for the facility, subject to a definitive agreement being reached.

Sempra claims that the development of the project is contingent upon additional customer commitments being obtained, as well as commercial agreements being completed, permits secured, financing obtained, and FID reached.

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