Sempra Infrastructure Partners Reach FID for Port Arthur LNG-2

The US-based Sempra, an energy investment company, on Tuesday announced that Sempra Infrastructure Partners (SIP) has reached a final investment decision to advance the development, construction and operation of Port Arthur LNG Phase 2.

This new phase will include two natural gas liquefaction trains, one LNG storage tank and associated facilities with a nameplate capacity of approximately 13 million tonnes per annum (Mtpa) of the US- produced LNG.

Incremental project capital expenditures at Phase 2 are estimated at $12 billion, plus an approximate $2 billion payment for shared common facilities, with commercial operations expected in 2030 and 2031 for Trains 3 and 4, respectively.

Funding for the Port Arthur LNG Phase 2 is supported by an equity investment led by Blackstone Credit & Insurance, together with an investor consortium including KKR, Apollo-managed funds and Private Credit at Goldman Sachs Alternatives. Together these investors have acquired a 49.9% minority equity interest for $7 billion. Sempra Infrastructure Partners has retained a 50.1% majority stake in the project.

In addition to securing 100% equity financing, Sempra Infrastructure Partners has contracted with global engineering, construction and project management firm Bechtel Energy Inc., which has received full notice to proceed for the project. Bechtel’s continued involvement from Phase 1 into Phase 2 is expected to drive favourable economics and help mitigate execution risk by leveraging efficiencies and learnings across phases.

Phase 2 is subscribed with long-term offtake under 20-year sales and purchase agreements with strategic partner ConocoPhillips as anchor, and high-quality counterparties EQT, JERA Co. Inc. and Sempra Infrastructure Partners.

Consistent with industry practice, Sempra Infrastructure Partners expects to enter into additional offtake agreements from time to time to enhance the overall economic value of the project, Sempra said.

Corporate Strategy

As part of its plans to advance its corporate strategy, Sempra said that it was executing on five value creation initiatives designed to simplify the company’s business model, improve financial performance and reduce risk.

The company expects these initiatives to strengthen its ability to deliver improved earnings growth while driving enhanced benefits for customers and communities across its service territories.

“The transactions announced today further Sempra’s corporate strategy by advancing the company’s capital recycling program and transition to a leading U.S. utility growth business,” said Jeffrey W. Martin, chairman and CEO of Sempra.

SIP Equity Stake Sale

Sempra also announced that it has agreed to sell a 45% equity interest in SIP, one of the North America’s leading energy infrastructure platforms, to affiliates of KKR, a leading global investment firm, with Canada Pension Plan Investment Board (CPP Investments).

Subject to adjustments, the transaction proceeds of $10 billion implies an equity value of $22.2 billion and an enterprise value of $31.7 billion for Sempra Infrastructure Partners.

Before adjustments, Sempra is expected to receive 47% of the cash at close, 41% by year-end 2027 and the balance approximately seven years after closing. This schedule helps Sempra generate attractive post-closing interest income as it efficiently reinvests proceeds over time in capital expenditures at its U.S. utilities.

The transaction is expected to close in Q2 – Q3 2026, subject to necessary regulatory and other approvals and closing conditions.

Upon closing, a KKR-led consortium will become the majority owner of Sempra Infrastructure Partners, holding a 65% equity stake, while Sempra will retain a 25% interest alongside Abu Dhabi Investment Authority’s (ADIA) existing 10% stake. Under the terms of the agreement, Sempra and ADIA will have certain minority rights in Sempra Infrastructure Partners.

The transaction also helps strengthen Sempra’s credit profile, deconsolidates Sempra Infrastructure Partners, improves Sempra’s business mix with a goal of approximately 95% earnings from regulated U.S. utilities and eliminates the need for equity issuances in the previously announced 2025-2029 capital plan.