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Sempra, Aramco Sign LNG Deal

ENERGY: Aramco to Take Stake in Texas Plant

SAN DIEGO – Aramco, Saudi Arabia’s state-owned oil company, has inked a deal with San Diego-based Sempra (NYSE: SRE) to receive some of the liquefied natural gas (LNG) cargo from a planned expansion of Sempra’s Port Arthur LNG export terminal in Texas. The Saudi Arabian oil company has also agreed to take a stake in the plant.

The deal – called a heads of agreement or an HoA – is preliminary and nonbinding.

Under the HoA announced on June 26, Aramco and Sempra will enter a 20-year sale and purchase agreement (SPA) for LNG offtake of 5 million metric tons per year from the Port Arthur LNG Phase 2 expansion project. The HoA further contemplates Aramco’s 25% participation in the project-level equity of Phase 2.

The parties said they expect to execute a binding LNG SPA and definitive equity agreements with terms substantially equivalent to those in the HoA. They did not say when such an agreement might be signed.

Sempra Infrastructure is building a $13 billion LNG export plant on a brownfield site in Port Arthur, Texas, on the Gulf of Mexico. The plant, capable of producing 13 million metric tons per year, could begin operating as soon as 2027. The proposed second phase involving Aramco would double the Port Arthur plant’s capacity.

A crucial federal permit for phase 2 has yet to be awarded. The White House on Jan. 26 announced a pause on pending approvals of LNG exports until the Department of Energy can update its economic and environmental analyses.

During an investor conference call in February, Sempra Chairman and CEO Jeffrey W. Martin told analysts that Port Arthur Phase 2 is a “very attractive, commercially viable project,” but that the company has to wait out the pause.

Bilateral Cooperation

“We are excited to advance discussions to expand the global reach of the Port Arthur LNG facility and the shared goals of the U.S. and Saudi Arabia, as reflected in recent bilateral discussions on energy cooperation between our two countries,” Martin said in a statement issued by the company. Martin was in Aramco’s headquarters city of Dhahran, Saudi Arabia to sign the HoA.

Martin also said that the Port Arthur LNG expansion “would help facilitate the broad distribution of U.S. natural gas across global energy markets. By expanding the global reach of the Port Arthur LNG facility, we have the opportunity to improve energy security, while providing a lower-carbon alternative to coal for electricity production.”

“We are excited to take this next step into the LNG sector,” said Nasir K. Al-Naimi, president of Aramco Upstream. “As a potential strategic partner in the Port Arthur LNG Phase 2 project, Aramco is well placed to grow its gas portfolio with the aim of meeting the world’s growing need for lower-carbon sources of energy. This agreement is a major step in Aramco’s strategy to become a leading global LNG player.”

Sempra is currently building two processing lines, called trains, at the Port Arthur plant.

The second phase would add two more trains. The site is capable of holding up to eight trains, the company said. Sempra has also announced plans for a carbon sequestration project in Port Arthur.

Aramco, which produces chemicals in addition to oil and gas, reported revenue of $446 billion in 2023 (1.65 trillion Saudi Arabian Riyals). The business employs 73,300 people.

Kirk Named to Sempra Board

In other news, Sempra announced on June 20 that Jennifer M. Kirk has joined its board of directors. Kirk is the global controller and chief accounting officer of Medtronic plc (NYSE: MDT). She comes to Sempra with extensive executive experience in finance, accounting and capital market activities, including more than 20 years in the energy industry.

Jennifer M. Kirk
Director
Sempra

Kirk, 49, previously worked at Occidental Petroleum Corp. (NYSE: OXY) for more than two decades, serving in roles of increasing responsibility, including senior vice president of integration and value capture, and vice president, controller and principal accounting officer.

With the appointment of Kirk, Sempra will have 10 directors; three of those directors arrived during the past five years.

Sempra
FOUNDED: 1998
CHAIRMAN & CEO: Jeffrey W. Martin
HEADQUARTERS: East Village, San Diego
BUSINESS: Energy services holding company, parent to San Diego Gas & Electric Co.
REVENUE: $16.72 billion (2023)
STOCK: SRE on the New York Stock Exchange
EMPLOYEES: More than 20,000 companywide
WEBSITE: www.sempra.com
CONTACT: 619-696-2000
NOTABLE: KKR and ConocoPhilips are partners in phase 1 of Sempra Infrastructure’s Port Arthur LNG export terminal. Phase 1 has all its approvals and is under construction

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