Sempra Infrastructure and INEOS Energy trading sign heads of agreement for LNG supply

Source: press release, 22 June 2022

The proposed Port Arthur LNG export project in Jefferson County, Texas is anticipated to include up to two natural gas liquefaction trains capable of producing, under optimal conditions, approximately 13.5 Mtpa of LNG
The proposed Port Arthur LNG export project in Jefferson County, Texas is anticipated to include up to two natural gas liquefaction trains capable of producing, under optimal conditions, approximately 13.5 Mtpa of LNG (illustration: Sempra Infrastructure)

Sempra Infrastructure, a subsidiary of Sempra, and INEOS Energy Trading Ltd., a subsidiary of INEOS, a global chemical products manufacturer, have announced they have entered into a heads of agreement (HoA) for the long-term supply of liquefied natural gas (LNG) from Sempra Infrastructure’s Gulf Coast LNG portfolio of projects under development in North America.

The HoA provides the framework for the negotiation and finalisation of a definitive 20-year LNG sale and purchase agreement for approximately 1.4 million tonnes per annum (Mtpa) of LNG delivered free-on-board from the proposed Port Arthur LNG project or Cameron LNG Phase 2 project.

“INEOS is one of Europe’s largest end-users of natural gas and we look forward to building a long-term relationship with a company that shares our vision of increasing the world’s energy security while simultaneously advancing lower-carbon energy sources,” says Justin Bird, CEO of Sempra Infrastructure. “This HoA demonstrates our ongoing momentum in advancing our next generation of LNG export facilities with an eye toward supplying US natural gas to some of the world’s leading energy and manufacturing companies.”

“We are delighted to begin a strategic relationship with Sempra Infrastructure bringing significant expertise in construction and operation of LNG facilities. This agreement is an important part of our strategy as we build a network of liquefaction, shipping and regasification capacity to deliver affordable, cleaner and reliable energy to our businesses and customers globally,” says David Bucknall, CEO of INEOS Energy.

Sempra Infrastructure is working to expand its Gulf Coast LNG asset base through the simultaneous development of the Port Arthur LNG project in Jefferson County, Texas, and the proposed expansion of the Cameron LNG facility in Hackberry, Louisiana. INEOS joins the company’s growing portfolio of global energy and manufacturing companies that have recently executed HoAs for potential long-term offtake from these projects.

In addition to the 1.4 Mtpa HoA with INEOS Energy Trading, last month Sempra Infrastructure announced an HoA with the Polish Oil & Gas Company (PGNiG) for 2 Mtpa from Cameron LNG Phase 2 and 1 Mtpa from Port Arthur LNG, with an option for PGNiG to reallocate the Cameron LNG Phase 2 volumes to Port Arthur LNG. Sempra Infrastructure also recently announced an HoA with RWE Supply and Trading for 2.25 Mtpa from the Port Arthur LNG project.

The Port Arthur LNG Phase 1 project has received all major permits and is anticipated to include up to two natural gas liquefaction trains capable of producing, under optimal conditions, approximately 13.5 Mtpa of LNG. In addition, the proposed Cameron LNG Phase 2 project, expected to include a single LNG train with a maximum production capacity of 6.75 Mtpa of LNG, continues to reach a number of important commercial and permitting milestones, including the launch of a competitive front-end engineering design (FEED) process.

The referenced HoAs are preliminary non-binding arrangements, and the development of the Port Arthur LNG and Cameron LNG Phase 2 projects remain subject to a number of risks and uncertainties, including reaching definitive agreements, securing all necessary permits, signing engineering and construction contracts, obtaining financing and incentives, and reaching a final investment decision.