Aramco and Sempra Sign SPA for LNG from Port Arthur LNG Phase 2

Aramco, one of the world’s leading integrated energy and chemicals companies, and Sempra, one of the leading energy infrastructure companies in the US, have signed a non-binding agreement on Wednesday.

The non-binding agreement is for a 20-year sale and purchase agreement (SPA) for liquefied natural gas (LNG) offtake of 5 million tonnes per annum (MTPA) from the Port Arthur LNG Phase 2 expansion project and allows the Saudi oil major to take a 25% stake in the second phase of Sempra’s Port Arthur LNG export plant in Texas.

The parties expect to execute a binding LNG SPA and definitive equity agreements with terms substantially equivalent to those in the HoA, with the SPA and equity agreements subject to a number of conditions.

Nasir K Al-Naimi, Aramco Upstream President, said that 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, he said.

Sempra’s Chairman and CEO Jeffrey W Martin said that the planned expansion of Port Arthur LNG would help facilitate the broad distribution of the US natural gas across global energy markets.

“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,” he added.

Port Arthur LNG is a natural gas liquefaction and export terminal in Southeast Texas with direct access to the Gulf of Mexico. The Port Arthur LNG Phase 1 project is currently under construction and consists of trains 1 and 2, as well as two LNG storage tanks and associated facilities. The Port Arthur LNG Phase 2 project is a competitively positioned expansion of the site to include the addition of up to two trains capable of producing up to 13 MTPA.

At the heart of Sempra Infrastructure’s flagship Port Arthur Energy Hub, Port Arthur LNG has potential to expand to a total of eight trains, which would position it as one of the world’s most significant LNG export facilities.

The facility is expected to play an important role in enhancing global energy security and resilience. Moreover, Sempra Infrastructure is actively advancing infrastructure projects within the Port Arthur Energy Hub, addressing both the rising demand for lower-carbon fuels and reduction. This includes the proposed Titan Carbon Sequestration project.

Second Deal

This is the second such agreement executed by Aramco in the last two weeks as it signed an agreement with NextDecade Corporation (NextDecade) for a 20-year LNG SPA for offtake from Train 4 at the Rio Grande LNG Facility at the Port of Brownsville in Texas on June 13.

As per the agreement, Aramco will purchase 1.2 MTPA of LNG for 20 years on a free on board basis, at a price indexed to Henry Hub.