ConocoPhillips agrees supply-investment deal with Sempra for projects in Texas and Mexico

Tuesday, 26 July 2022
Free Read

ConocoPhillips, the US major with expanding liquefied natural gas volumes, has signed an accord for long-term offtake and a 30 percent equity stake in Sempra Infrastructure’s proposed Port Arthur LNG project in Texas.

Sempra, the California-based utility and operator of the Cameron LNG plant in Louisiana, said its Sempra Infrastructure subsidiary signed a heads of agreement (HOA) to develop the Port Arthur LNG project and jointly participate with ConocoPhillips in other related energy infrastructure in Texas and the Pacific Coast of Mexico.

Costa Azul

The Mexican project is the transformation of Sempra's existing Costa Azul import facility into an export plant.

The Port Arthur project HOA anticipates the negotiation of a definitive agreement for a 20-year LNG tolling arrangement for 5 million tonnes per annum from Phase 1 of the venture in Jefferson County.

The HOA also contemplates a 30 percent equity investment in Phase 1 of Port Arthur LNG by ConocoPhillips and the potential for ConocoPhillips to supply additional natural gas to the proposed facility for other LNG sales.

“At Sempra, we believe bold new partnerships will be central to solving the world's energy security and decarbonization challenges,” said Jeffrey W. Martin, Chairman and Chief Executive of Sempra.

“That is why we are excited to announce this proposed partnership with ConocoPhillips, a leading global energy producer that also shares our vision of responsibly developing and delivering cleaner energy resources,” stated Martin.

Ryan Lance, Chairman and CEO of ConocoPhillips, said the decision to enter into this agreement with Sempra provided a ground-floor opportunity to participate in premier LNG developments.

“Sempra brings a long history of successful LNG project development, and we look forward to working together to provide reliable LNG to support the energy transition and strengthen US and global energy security,” added Lance.

Sempra explained that in addition to the provisions related to Phase 1 of the project, ConocoPhillips would have the option to acquire certain LNG offtake and equity ownership from future developments at the Port Arthur site, which may include additional LNG Trains.

Phase 1 of the Port Arthur venture has all its permits and was expected to include two LNG Trains and with storage tanks and associated facilities to produce up to 13.5 MTPA of LNG.

Sempra Infrastructure and US LNG and energy engineers Bechtel are working on updating the terms of the project's fixed-price engineering, procurement and construction contract that was previously announced in 2020.

A similarly sized Phase 2 project at Port Arthur is also under active marketing and development.

Additionally, the HOA provides for collaboration between the two companies for LNG offtake, natural gas supply and equity investment for Phase 2 of the Costa Azul plant in Baja California in Mexico, including up to one-third of the exported LNG volumes.

Related Video

Free Read