Saudi Aramco and Sempra Take Step Forward on Port Arthur LNG

Port Arthur LNG, phase 1 (Sempra)

Published Jan 6, 2020 10:45 PM by The Maritime Executive

American utility giant Sempra Energy and Saudi Aramco announced Monday that they have signed an interim agreement for their joint Port Arthur LNG export project, which is currently under development in Jefferson County, Texas. The deal remains subject to final review and authorization on both sides. 

The firms signed a heads of agreement last May, which calls for Aramco to purchase five million tonnes per annum (mtpa) of liquefied natural gas and make a 25 percent equity investment in the Port Arthur LNG project. 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 the facilities to export up to 11 mtpa of LNG on a long-term basis. Earlier this year, Sempra LNG initiated the Federal Energy Regulatory Commission process for an expansion that would add two additional liquefaction trains, bringing the total export capacity to 22 mtpa.

"Today's announcement is a reflection of the growing alignment between our companies' interest in the overall success of the Port Arthur LNG project," said Jeffrey W. Martin, chairman and CEO of Sempra Energy. "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."

Aramco expects the global demand for LNG to increase by four percent per year, potentially exceeding 500 mtpa by 2035. Natural gas provides a natural complement to Saudi's core oil business; it is the world's most valuable oil company (and the most valuable company of any kind). 

Port Arthur LNG is one of Sempra's five LNG development projects in North America; the firm ultimately aims to build out the export infrastructure for 45 mtpa. Its Cameron LNG plant in Louisiana is in commercial operation now, and all three liquefaction trains in the first phase of its development should be producing by the end of 2020.