Sempra Energy and Saudi Aramco have announced their respective subsidiaries, Sempra LNG and Aramco Services Company, have signed an Interim Project Participation Agreement (IPPA) for the Port Arthur LNG export project under development in Jefferson County, Texas.
The IPPA represents another milestone for both companies after having signed a heads of agreement in May last year for the purchase of 5 million tonnes per annum (Mtpa) of liquefied natural gas (LNG) and a 25% equity investment in the Port Arthur LNG project.
“Today’s announcement is a reflection of the growing alignment between our companies’ interest in the overall success of the Port Arthur LNG project,” says Jeffrey W. Martin, chairman and CEO of Sempra Energy. “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.”
Saudi Aramco’s President and CEO Amin H. Nasser says, “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.”
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 Mtpa of LNG on a long-term basis. Earlier this year, Sempra LNG initiated the Federal Energy Regulatory Commission 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 Mtpa of LNG.
“Port Arthur LNG is expected to play a critical role in helping shape the future of global energy trade,” adds Martin. “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.”
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. Each party’s ultimate participation in the Port Arthur LNG export project also remains subject to the execution of related agreements and the fulfilment 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.
Port Arthur LNG is one of Sempra LNG’s five strategically located LNG development opportunities in North America and is a component of Sempra LNG’s goal of developing the LNG infrastructure needed to export 45 Mtpa of clean natural gas to the global LNG market.
Development of Sempra Energy’s LNG export projects is contingent upon obtaining binding customer commitments, completing the required commercial agreements, securing all necessary permits, obtaining financing and reaching final investment decisions, among other factors.