Sempra Infrastructure and ConocoPhillips have struck a 5 million tonne per year LNG supply contract, from the planned Port Arthur project in Texas.
Conoco will also acquire a 30% stake in the project’s first phase, while providing the feedgas for the liquefaction plant.
The deal sees Conoco stepping in to fill a spot that had been destined for Saudi Aramco, under a deal in 2019 that fell apart.
Sempra plans to take a final investment decision (FID) on Port Arthur’s first phase in the first quarter of 2023. The company has signed up Bechtel to carry out the engineering, procurement and construction (EPC) work, worth $10.5 billion.
Sempra has signed a number of heads of agreement (HoA) on Port Arthur LNG. In early November, the company said it had completed marketing for the first phase through these non-binding agreements. The Conoco deal is the first firm agreement, though.
“At Sempra, we certainly believe that great projects are the result of great partnerships,” said Sempra chairman and CEO Jeffrey W. Martin.
“That is why we are excited to announce a broad strategic relationship with ConocoPhillips, which has a growing global footprint across the LNG value chain. Together, we have a shared view of the role this facility can play in supporting global economies with energy supplies that advance both energy security and environmental goals.”
Conoco chairman and CEO Ryan Lance welcomed the deal. Taking part in Port Arthur LNG will “further enhance our portfolio as we continue to respond to global demand for reliable supply of natural gas”. Sempra, he said, “shares our commitment to a lower-carbon future”.
The first phase of the project includes two LNG trains and storage tanks, capable of producing 13.5mn tpy. Plans are also under way for a second phase, which would double capacity.
Aramco had signed a HoA on joining Port Arthur in 2019. The Saudi company would have taken a 5mn tpy supply contract and a 25% equity stake. The Aramco HoA expired in mid-2021.
Poland’s PGNiG struck an HoA to take 2mn tpy from LNG in 2018 and then cancelled it in 2021. In May this year, though, it signed a new HoA for 2mn tpy from Cameron LNG and 1mn tpy from Port Arthur. The agreement allows PGNiG to shift its volumes from Cameron LNG to Port Arthur.
Conoco signed its HoA in July this year. The speed with which the company translated its non-binding agreement into a firm deal underscores the newfound appetite for LNG contracts in 2022.