GLNG: Port Arthur LNG plans suffer another blow

US-based Sempra Energy announced this week that it had signed a memorandum of understanding (MoU) with Poland’s PGNiG for the potential purchase of around 2mn tonnes per year (tpy) of LNG. The preliminary deal potentially spells bad news for Sempra’s proposed Port Arthur LNG export project in Texas.
Sempra had a definitive agreement with PGNiG to supply 2mn tpy from Port Arthur LNG. However, according to PGNiG, the new MoU now allows for the volumes previously contracted at Port Arthur to be shifted to other projects in Sempra’s portfolio.
These are the Cameron LNG export terminal on the US Gulf Coast, and Energía Costa Azul (ECA) LNG, which is under construction in Mexico.
The MoU comes after Sempra said in late June that it had been unable to finalise a long-term deal with Saudi Aramco to support the Port Arthur LNG project. During the company’s investor day presentation, Sempra’s CEO, Jeffrey Martin, said ECA LNG was the top infrastructure priority and that a proposed expansion at Cameron LNG had overtaken Port Arthur LNG in terms of priority.
Martin added that Port Arthur had “moved back in terms of the timeline”. Sempra had already suggested previously that an FID on Port Arthur could be pushed back from 2021 to 2022, and the MoU with PGNiG comes as a further setback, given that the Polish company was the only one to have signed a definitive agreement for supply from the project. Martin had previously said that he did not see any scenario under which an FID would be taken without the project being fully contracted.