Oil and gas giant Aramco and Sempra, one of North America’s leading energy infrastructure companies, announced on Wednesday that their respective subsidiaries have executed a non-binding Heads of Agreement (HoA) for a 20-year sale and purchase agreement (SPA) for liquefied natural gas (LNG) offtake of 5 million tonnes per annum (Mtpa) from the Port Arthur LNG Phase 2 expansion project. The HoA further contemplates Aramco’s 25 percent participation in the project-level equity of Phase 2.

A statement issued by Aramco said the parties “expect to execute a binding LNG SPA and definitive equity agreements with terms substantially equivalent to those in the HoA with the SPA and equity agreements subject to a number of conditions.”

Port Arthur LNG is a natural gas liquefaction and export terminal in Southeast Texas with direct access to the Gulf of Mexico.

Nasir K Al-Naimi, Aramco Upstream President, said the agreement is a major step in Aramco’s strategy to become a leading global LNG player and meet the world’s growing need for lower-carbon sources of energy.

Jeffrey W Martin, Sempra Chairman and CEO, added that the planned expansion of Port Arthur LNG would help facilitate the broad distribution of U.S. natural gas across global energy markets.

The Port Arthur LNG Phase 1 project is currently under construction and consists of trains 1 and 2, as well as two LNG storage tanks and associated facilities. The Port Arthur LNG Phase 2 project is a competitively positioned expansion of the site to include the addition of up to two trains capable of producing up to 13 Mtpa.

Port Arthur LNG has potential to expand to a total of eight trains, which would position it as one of the world’s most significant LNG export facilities.

(Editing by Anoop Menon) (anoop.menon@lseg.com)

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