Saudi Aramco and Sempra Energy announced Wednesday that their respective subsidiaries, Sempra LNG and Aramco Services Company, signed a heads of agreement (HOA) for the sale of LNG offtake from Sempra's Port Arthur LNG project in North America, as well as a 25% equity investment in Phase 1 of the project.
According to the joint statement from the companies, the HOA anticipates the negotiation and finalization of a definitive 20-year LNG sale-and-purchase agreement for five million tonnes per annum (Mtpa) of LNG offtake from Phase 1 of the Port Arthur LNG export project under development.
It also includes the negotiation and finalization of a 25% equity investment in Phase 1 of Port Arthur LNG.
Saudi Aramco CEO and President Amin Nasser described the agreement with Sempra LNG as a major step forward in Saudi Aramco’s long-term strategy to become a leading global LNG player.
"With global demand for LNG expected to grow by around 4% per year, and likely to exceed 500 million metric tons a year by 2035, we see significant opportunities in this market, and we will continue to pursue strategic partnerships which enable us to meet rising global demand for LNG," he added.
"At Sempra Energy, we are developing one of the largest LNG export infrastructure portfolios in North America, with an eye towards connecting millions of consumers to cleaner, more reliable energy sources," said Jeffrey W. Martin, chairman and CEO of Sempra Energy.
"We are pleased to partner with affiliates of Saudi Aramco, the largest oil and gas company in the world, to advance the development of Sempra LNG’s natural gas liquefaction facility in Texas and enable the export of American natural gas to global markets," he added.
According to the press release, earlier in May, the U.S. Department of Energy issued Port Arthur LNG’s authorization to export domestically produced natural gas to countries that do not have a free trade agreement with the U.S.
In April, Port Arthur LNG and its affiliates received authorization from the Federal Energy Regulatory Commission to site, construct and operate the liquefaction export facility and related natural gas pipelines.
The project is expected to include two liquefaction trains, up to three LNG storage tanks and associated facilities that should enable the export of approximately 11 Mtpa of LNG on a long-term basis.
"Port Arthur LNG could be one of the largest LNG export projects in North America, with potential expansion capabilities of up to eight liquefaction trains or approximately 45 Mtpa of capacity," the statement added.
The ultimate participation by Aramco Services Company and its affiliates in the Port Arthur LNG project remains subject to finalization of definitive agreements, among other factors.
By Hale Turkes