Sempra Infrastructure announced on June 12, a significant step forward for its Port Arthur LNG Phase 2 development project in Jefferson County, Texas. The company has executed a non-binding heads of agreement (HOA) with JERA Co. Inc, Japan's largest power generation company, for a 20-year sale and purchase agreement (SPA) for liquefied natural gas (LNG) offtake. This crucial agreement solidifies a commitment for 1.5 million tonnes per annum (Mtpa) of LNG on a free on board (FOB) basis.
The proposed Port Arthur LNG Phase 2 is designed to include two liquefaction trains, with an anticipated production capacity of approximately 13 Mtpa of LNG. This addition would increase it’s liquefaction capacity from 13 Mtpa capacity of Phase 1 (currently under construction) to a substantial 26 Mtpa. Furthermore, Sempra Infrastructure is already exploring future phases, which are in the early stages of development.
The Port Arthur LNG Phase 2 project has successfully secured all necessary key permits. In May, the project received crucial authorization from the U.S. Department of Energy, enabling it to export U.S. LNG to countries not currently holding a free-trade agreement with the United States. This authorization broadens the project's market reach and enhances its global competitiveness. Prior to this, in September 2023, the project also obtained authorization from the Federal Energy Regulatory Commission (FERC).
This agreement with JERA builds upon a series of advancements for the Port Arthur LNG Phase 2 project. In June 2024, Sempra and Aramco signed a non-binding heads of agreement for a long-term LNG offtake agreement and a potential equity investment in the project. Additionally, in July 2024, Sempra announced the selection of Bechtel for a fixed-price engineering, procurement, and construction (EPC) contract for the project.
The Port Arthur LNG Phase 1 project is currently well underway, with construction actively progressing. Commercial operation for trains 1 and 2 of Phase 1 is anticipated in 2027 and 2028, respectively. The successful execution and operation of Phase 1 will lay a robust foundation for the subsequent expansion.
Justin Bird, chief executive officer of Sempra Infrastructure, emphasized the strategic importance of this partnership, stating, "We are pleased to collaborate with JERA, Japan's largest power generation company and one of the world's largest LNG buyers, as they continue to work with the United States to diversify their sources to help strengthen the resilience and dependability of their energy supply." Bird further highlighted the progress being made towards FID, noting that the project is "expected to extend the reach of U.S. natural gas to global energy markets."
