Freeport LNG Signs Up Japan's Sumitomo

The Texas-based Freeport LNG project has entered into a binding heads of agreement (HoA) with Japan’s Sumitomo Corporation for 2.2mn mt/yr of LNG from the fourth Freeport train, the two companies said in a joint statement September 5.

Sumitomo Corporation of Americas (SCOA), a subsidiary of Sumitomo Corporation, will negotiate for a 20-year liquefaction tolling agreement (LTA), which is expected to start in 2023 upon the commencement of commercial operations of the fourth train (Train 4) of Freeport LNG’s natural gas liquefaction and export facility.  

The 2.2mn mt/yr of capacity to be contracted under the LTA will enable SCOA to significantly expand its US natural gas-related business across the value chain, from upstream development to LNG export, the companies said. 

“We are pleased to announce the start of a long-term relationship with Sumitomo as our first Train 4 foundation customer,” said Freeport LNG CEO Michael Smith. “Sumitomo’s 2.2mn mt/yr of capacity under this HoA is a major step toward Freeport LNG contracting the approximately 3.5mn mt/yr needed for financing and commencing construction of Train 4.” 

FLNG Liquefaction 4 is developing Train 4, and is a wholly owned subsidiary of Freeport LNG, which owns and operates an LNG terminal on Quintana Island, near Freeport, Texas. Freeport LNG began operating as an import terminal in June 2008, but is expected to begin export operations in 2019 - somewhat delayed by Hurricane Harvey in August 2017 and contractor delays.

In aggregate, its three natural gas liquefaction trains currently under construction are expected to produce in excess of 15mn mt/yr LNG, of which Freeport said that 13.9mn mt/yr has been contracted to Jera, Osaka Gas, BP, Toshiba America LNG Corp, South Korea's SK E&S LNG and Freeport LNG Marketing, which concluded the recently announced agreement with Trafigura.