Sempra Infrastructure and JERA Sign Heads of Agreement for U.S. LNG Supply

Rhea-AI Summary

Sempra Infrastructure has signed a non-binding heads of agreement with JERA for a 20-year LNG supply deal from the Port Arthur LNG Phase 2 project in Texas. The agreement covers 1.5 million tonnes per annum of LNG supply. The Phase 2 project, which has received key permits including DOE and FERC authorizations, will add two liquefaction trains with 13 Mtpa capacity, potentially doubling the facility's total capacity to 26 Mtpa. The project has made significant progress, with Bechtel selected for the EPC contract in July 2024 and a previous HOA signed with Aramco in June 2024. Phase 1 of Port Arthur LNG is under construction with expected commercial operation in 2027-2028.

Positive

• Secured 20-year LNG supply agreement with JERA, Japan's largest power generation company
• Project has received all key permits including DOE and FERC authorizations
• Phase 2 will double Port Arthur LNG facility's capacity to 26 Mtpa
• Previous HOA signed with Aramco includes potential equity investment
• Fixed-price EPC contract with Bechtel reduces construction cost uncertainty

Negative

• Agreement is non-binding and subject to final investment decision
• Project faces various risks including need for additional commercial agreements and financing
• Phase 1 construction completion still 2-3 years away (2027-2028)

Insights

Energy Infrastructure Analyst

Sempra's non-binding LNG supply agreement with JERA represents strategic positioning in global energy markets with potential long-term revenue stability.

Sempra Infrastructure's new heads of agreement with JERA marks significant commercial progress for its Port Arthur LNG Phase 2 development. This non-binding agreement outlines a potential 20-year commitment for 1.5 million tonnes per annum (Mtpa) of LNG supply, representing approximately 11.5% of Phase 2's expected 13 Mtpa capacity.

The agreement with JERA, Japan's largest power generation company, carries strategic importance beyond just volume. Securing a blue-chip customer like JERA strengthens Sempra's commercial position and increases the likelihood of reaching final investment decision (FID) for Phase 2. This follows another recent heads of agreement with Aramco that contemplates both offtake and equity investment in the project.

Sempra has methodically cleared key regulatory hurdles for Phase 2, obtaining Department of Energy export authorization for non-free trade agreement countries and Federal Energy Regulatory Commission approval. The company has also selected Bechtel for a fixed-price EPC contract, helping mitigate construction cost risks.

If both phases reach completion, Sempra's Port Arthur facility would double its capacity to 26 Mtpa, positioning it as a major player in the global LNG market. The timing aligns with projected increases in global LNG demand, particularly from Asian markets seeking supply diversification.

While Phase 1 is already under construction with operations expected in 2027-2028, Phase 2 still faces several hurdles including finalizing binding commercial agreements, securing financing, and formal FID. This announcement represents progress but not certainty for the expansion project.

HOUSTON, June 11, 2025 /PRNewswire/ -- Sempra Infrastructure, a subsidiary of Sempra (NYSE: SRE), today announced it has executed a non-binding heads of agreement (HOA) with JERA Co. Inc (JERA) for a 20-year sale and purchase agreement for liquefied natural gas (LNG) offtake of 1.5 million tonnes per annum (Mtpa) on a free on board basis from the Port Arthur LNG Phase 2 development project in Jefferson County, Texas.

"We are pleased to collaborate with JERA, Japan's largest power generation company and one of the world's largest LNG buyers, as they continue to work with the United States to diversify their sources to help strengthen the resilience and dependability of their energy supply," said Justin Bird, chief executive officer of Sempra Infrastructure. "With this announcement, we continue to make steady progress towards reaching a final investment decision for the project, which is expected to extend the reach of U.S. natural gas to global energy markets."

The proposed Port Arthur LNG Phase 2 development project is competitively positioned and is under active marketing. Future phases are also in the early development stage.

The project has received all its key permits and is expected to include two liquefaction trains capable of producing approximately 13 Mtpa of LNG, which could increase the total liquefaction capacity of the Port Arthur LNG facility from approximately 13 Mtpa for Phase 1, which is under construction, to up to approximately 26 Mtpa.

The project received authorization from the U.S. Department of Energy in May to export U.S. LNG to countries that do not have a free-trade agreement with the U.S. The project also received authorization from the Federal Energy Regulatory Commission in September 2023.

In June 2024, Sempra Infrastructure and a subsidiary of Aramco signed a non-binding heads of agreement contemplating both a long-term LNG offtake agreement and an equity investment in the Port Arthur LNG Phase 2 project. In July 2024, Sempra Infrastructure announced that Bechtel had been selected for a fixed-price engineering, procurement and construction contract for the project.

The Port Arthur LNG Phase 1 project is currently under construction and expected to achieve commercial operation in 2027 and 2028 for trains 1 and 2, respectively.

The development of the Port Arthur LNG Phase 2 project remains subject to a number of risks and uncertainties, including completing the required commercial agreements, securing and/or maintaining all necessary permits, obtaining financing and reaching a final investment decision, among other factors.

About Sempra Infrastructure

Sempra Infrastructure, headquartered in Houston, is focused on delivering energy for a better world by developing, building, operating and investing in modern energy infrastructure, such as LNG, energy networks and low-carbon solutions that are expected to play a crucial role in the energy systems of the future. Through the combined strength of its assets in North America, Sempra Infrastructure is connecting customers to safe and reliable energy and advancing energy security. Sempra Infrastructure is a subsidiary of Sempra (NYSE: SRE), a leading North American energy infrastructure company. For more information, visit SempraInfrastructure.com or connect with Sempra Infrastructure on social media @SempraInfra.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions about the future, involve risks and uncertainties, and are not guarantees. Future results may differ materially from those expressed or implied in any forward-looking statement. These forward-looking statements represent our estimates and assumptions only as of the date of this press release. We assume no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise.

In this press release, forward-looking statements can be identified by words such as "believe," "expect," "intend," "anticipate," "contemplate," "plan," "estimate," "project," "forecast," "envision," "should," "could," "would," "will," "confident," "may," "can," "potential," "possible," "proposed," "in process," "construct," "develop," "opportunity," "preliminary," "initiative," "target," "outlook," "optimistic," "poised," "positioned," "maintain," "continue," "progress," "advance," "goal," "aim," "commit," or similar expressions, or when we discuss our guidance, priorities, strategies, goals, vision, mission, projections, intentions or expectations.

Factors, among others, that could cause actual results and events to differ materially from those expressed or implied in any forward-looking statement include: decisions, audits, investigations, inquiries, regulations, denials or revocations of permits, consents, approvals or other authorizations, and other actions, including the failure to honor contracts and commitments, by the (i) U.S. Department of Energy, Comisión Nacional de Energía, U.S. Federal Energy Regulatory Commission, U.S. Internal Revenue Service and other regulatory bodies and (ii) U.S., Mexico and states, counties, cities and other jurisdictions therein and in other countries where we do business; the success of business development efforts, construction projects, acquisitions, divestitures and other significant transactions, including risks related to (i) being able to make a final investment decision, (ii) negotiating pricing and other terms in definitive contracts, (iii) completing construction projects or other transactions on schedule and budget, (iv) realizing anticipated benefits from any of these efforts if completed, (v) obtaining regulatory and other approvals and (vi) third parties honoring their contracts and commitments; changes to our capital expenditure plans and their potential impact on growth; changes, due to evolving economic, political and other factors, to (i) trade and other foreign policy, including the imposition of tariffs by the U.S. and foreign countries, and (ii) laws and regulations, including those related to tax and the energy industry in the U.S. and Mexico; litigation, arbitration, property disputes and other proceedings; cybersecurity threats, including by state and state-sponsored actors, of ransomware or other attacks on our systems or the systems of third parties with which we conduct business, including the energy grid or other energy infrastructure; the availability, uses, sufficiency, and cost of capital resources and our ability to borrow money or otherwise raise capital on favorable terms and meet our obligations, which can be affected by, among other things, (i) actions by credit rating agencies to downgrade our credit ratings or place those ratings on negative outlook, (ii) instability in the capital markets, and (iii) fluctuating interest rates and inflation; the impact on our ability to pass through higher costs to customers due to volatility in inflation, interest and foreign currency exchange rates and commodity prices and the imposition of tariffs; the impact of climate policies, laws, rules, regulations, trends and required disclosures, including actions to reduce or eliminate reliance on natural gas, the risk of nonrecovery for stranded assets, and uncertainty related to emerging technologies; weather, natural disasters, pandemics, accidents, equipment failures, explosions, terrorism, information system outages or other events, such as work stoppages, that disrupt our operations, damage our facilities or systems, cause the release of harmful materials or fires or subject us to liability for damages, fines and penalties, some of which may not be recoverable through insurance or may impact our ability to obtain satisfactory levels of affordable insurance; the availability of natural gas, including disruptions caused by failures in the pipeline and storage systems or limitations on the injection and withdrawal of natural gas from storage facilities; and other uncertainties, some of which are difficult to predict and beyond our control.

These risks and uncertainties are further discussed in the reports that Sempra has filed with the U.S. Securities and Exchange Commission (SEC). These reports are available through the EDGAR system free-of-charge on the SEC's website, www.sec.gov, and on Sempra's website, www.sempra.com. Investors should not rely unduly on any forward-looking statements.

Sempra Infrastructure and Sempra Infrastructure Partners are not the same company as San Diego Gas & Electric Company or Southern California Gas Company, and none of Sempra Infrastructure, Sempra Infrastructure Partners nor any of its subsidiaries is regulated by the California Public Utilities Commission.

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SOURCE Sempra Infrastructure

FAQ

What is the size of the LNG supply agreement between Sempra Infrastructure and JERA?

The agreement covers 1.5 million tonnes per annum (Mtpa) of LNG supply over 20 years from the Port Arthur LNG Phase 2 project.

When will Sempra's Port Arthur LNG Phase 1 begin commercial operations?

Port Arthur LNG Phase 1 is expected to begin commercial operations in 2027 for train 1 and 2028 for train 2.

What is the total capacity of Sempra's Port Arthur LNG facility after Phase 2?

After Phase 2 completion, the total liquefaction capacity will increase from 13 Mtpa to approximately 26 Mtpa.

Who are the major partners in Sempra's Port Arthur LNG Phase 2 project?

Key partners include JERA for LNG offtake, Aramco for potential equity investment and LNG offtake, and Bechtel as the EPC contractor.

What key permits has Sempra's Port Arthur LNG Phase 2 received?

The project has received DOE authorization for LNG exports to non-free trade agreement countries and FERC authorization in September 2023.