INEOS to Receive LNG from Sempra’s Texas Development

(Credit: Sempra Infrastructure)

Sempra Infrastructure has reached a long-term deal to supply liquefied natural gas (LNG) to British energy company INEOS from its Port Arthur LNG project, as agreements and investments for the Texas development ramp-up.

INEOS will purchase approximately 1.4 million metric tons of LNG per year for 20 years as part of the proposed first phase of the LNG project. The companies also signed a non-binding agreement for the potential purchase of an additional 200,000 metric tons of LNG per year from phase 2 of the development.

It is the second large deal from the Port Arthur project over the past several weeks. In November 2022, ConocoPhillips agreed with Sempra to purchase 5 million metric tons of LNG a year from development, also a 20-year deal, as well as a 30% stake in the first phase of the operation.

The Port Arthur LNG project is being developed in Texas and the first phase includes two natural gas liquefaction trains and LNG storage tanks and facilities with the potential of producing up to 13.5 million metric tons of LNG a year. The second phase is expected to be a similar size.

Natural gas makes up about a quarter of the world’s electricity production, according to the International Energy Agency. LNG is significantly less carbon-intensive than other energy sources, and it is 600 times smaller than its gaseous state, which makes it easy to transport.

Shell and GE recently teamed up to find ways to further reduce carbon emissions and water consumption of the fuel using Shell’s blue hydrogen process. The companies say LNG demand could double by 2040.

Sempra has been active in renewable energy projects, including a green hydrogen and ammonia venture with Avangrid. Sempra also recently finalized an engineering, procurement, and construction contract with Bechtel Energy for the first phase of the development. LNG Prime reports the deal is worth approximately $10.5 billion.

Earlier in November Sempra agreed with midstream company Williams to transport LNG in exchange for 3 million metric tons of the gas from the Texas development as well as the second phase of the Cameron LNG project in the works in Louisiana.

The INEOS deal illustrates that LNG production in the United States can be used in Europe. In July, INEOS also signed a deal with the proposed German LNG Terminal in Brunsbuettel. The company says the deal helps it secure key pieces in the supply chain across the Atlantic corridor and will help it secure energy resources in Europe.

ConocoPhillips and RWE also have made agreements for LNG from the German project.

Development of both phases of the Port Arthur LNG project is contingent on required commercial agreements, securing all necessary permits, and obtaining financing. Sempra says it plans to have a final investment decision for the initial phase during the first quarter of 2023. The company hopes to make the first LNG deliveries from the project by 2027.