Sempra and INEOS strike agreement for possible LNG supply
Sempra Infrastructure has entered into a 20-year partnership deal with INEOS Energy to supply 1.4 mn metric tons/year of free-on-board LNG from its Port Arthur LNG phase 1 project or Cameron LNG phase 2 project, INEOS announced June 22.
The heads of agreement (HOA) contemplates the negotiation of a sales and purchase agreement covering LNG from the two Gulf Coast plants for 20-year periods, delivering additional volumes for INEOS's global trading portfolio. In addition, INEOS says the additional gas will help meet the needs of its internal operations in Europe, which include petrochemical plants, speciality chemical operations and oil product refineries.
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INEOS is one of the world's biggest end-users of natural gas, and can source feedstock from its own upstream operations off the coasts of Denmark and the UK, and also brings in ethane supplies from US shale gas assets.
This is the first time it has struck a long-term deal for global LNG from a third-party supplier, enabling it to pivot gas supply chains to find the best pricing deal in tighter energy markets that have arisen following the war in Ukraine, and the emptying of European gas reserves during the last winter gas demand season.
Company officials say INEOS will also look to build partnerships with other industrial energy users throughout Europe, so they can access its traded LNG portfolio on similar terms. They say INEOS would become the first market participant to also trade LNG in this way "for many years."
Chairman Brian Gilvary stated: "This agreement represents a major step forward in the INEOS Energy journey, at a time of significant transformation in the energy industry.
"Our entry into the global LNG market opens new opportunities to supply affordable, clean and reliable energy to the market. Long term supply from INEOS Energy will help alleviate the structural energy issues in Europe.”
The Port Arthur LNG project will offer 13.5mn mt/yr of optimal liquefaction capacity in its initial phase, situated across 3,000 acres of Gulf Coast acreage in Jefferson County, Texas. There is no firm launch date, although a second phase consisting of two additional liquefaction units is expected to eventually bring optimal capacity to around 27mn mt/yr.
Sempra Infrastructure is contemplating a scaled-down second phase at the 12mn mt/yr Cameron LNG facility in Louisiana that would add a new 6.75mn mt/yr train and undertake various debottlenecking activities. Sempra's project partners at Cameron LNG are TotalEnergies, Mitsui & Co and Japan LNG Investment.
Both projects are awaiting final investment decisions.