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Sempra Energy subsidiary and Polish Oil & Gas Co. sign agreement to export US LNG to Europe

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Hydrocarbon Engineering,

Port Arthur LNG LLC, a subsidiary of Sempra Energy, and the Polish Oil & Gas Co. (PGNiG) have announced they have entered into a definitive 20-year sale-and-purchase agreement for LNG from the Port Arthur LNG liquefaction-export facility under development in Jefferson County, Texas, US.

While financial terms were not disclosed, the agreement is for the sale and purchase of 2 million tpy, or approximately 2.7 billion m3/yr (after regasification) – enough natural gas to meet about 15% of Poland's daily needs. The agreement is subject to certain conditions precedent, including Port Arthur LNG making a final investment decision.

Under the agreement, LNG purchases from Port Arthur LNG will be made on a free-on-board basis, with PGNiG responsible for shipping the LNG from the Port Arthur terminal to the final destination. Port Arthur LNG will manage gas pipeline transportation, liquefaction processing and cargo loading, giving PGNiG flexibility in cargo management. PGNiG plans to deliver cargos to domestic customers in Poland or trade LNG on the global market, once operations commence.

In addition to the PGNiG agreement, Sempra Energy signed a Memorandum of Understanding (MOU) with Korea Gas Corp. last year for potential participation in the Port Arthur LNG project.

The Port Arthur liquefaction-export facility is proposed to include two natural gas liquefaction trains capable of processing approximately 11 million tpy of LNG; up to three LNG storage tanks; two marine berths, and associated facilities.

The Port Arthur liquefaction-export facility is scheduled to receive its final environmental impact statement from the Federal Energy Regulatory Commission next month. Earlier this year, Bechtel was selected by Port Arthur LNG to serve as the engineering, procurement, construction and commissioning contractor for the facility, subject to reaching a definitive agreement.

Development of the Port Arthur LNG liquefaction facility is contingent upon obtaining additional customer commitments, completing the required commercial agreements, securing all necessary permits, obtaining financing, incentives and other factors, and reaching a final investment decision.

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