Save for later Print Download Share LinkedIn Twitter US developer Sempra is moving ahead with a second phase of its 13.5 million ton per year Port Arthur LNG plant in Texas, capitalizing on Europe’s need to cut its reliance on Russian piped gas supplies and the need to secure flexible LNG volumes. “We are in the process of moving from a preliminary, heads of agreement to definitive documents and a sales and purchase agreement. We expect that to conclude pretty shortly,” Sempra Infrastructure president Dan Brouillette tells Energy Intelligence in an interview. Now the next step for the project is to secure the necessary financing.The new market reality has shifted the fortunes of the Port Arthur LNG development. The project, located in Jefferson County, Texas, was facing serious difficulties last year and its Phase 2 was not even mentioned at the company’s first quarter 2022 results. But the radical change on the European energy landscape has given it new life. Sempra secured heads of agreements with Poland’s PGNIG, German utility RWE and the UK’s Ineos, as well as a strategic partnership earlier this year with US independent ConocoPhillips. Under the deal, Conoco would offtake 5 million tons/yr under a 20-year tolling type arrangement and would also take a 30% equity stake in Port Arthur Phase 1.Sempra’s talks with the European companies to convert the preliminary deals into firm sales and purchase agreements are progressing well, Brouillette says. The company is optimistic to be able to conclude all the necessary conversations soon, with the long-awaited final investment decision (FID) possibly just around the corner. “We could potentially take FID on that facility in the first half part of 2023. We could stretch it a little bit and maybe get to the end of 2022, [but] more likely early 2023,” he says.Meanwhile, the Mexican government has asked Sempra to consider a third LNG project on the country’s Pacific coast, to be located in Salina Cruz, Brouillette says. The company is in "very early conversations" on the project, but he believes it is a sign of confidence from the government that it considered them to develop it. Sempra is already involved in the Costa Azul and Vista Pacifico LNG projects in a joint venture with French major TotalEnergies. Brouillette believes Sempra "stands head and shoulders above other players" in Mexico due to their 25-year history in the country.Brouillette still expects Russia to retain some market share in Europe despite the invasion of Ukraine and supply cuts by Russian state exporter Gazprom. “I think everyone would expect at least some Russian gas to come back into Europe. The question is how much? My personal view is it won't ever be 45% [of total EU imports], because these lessons have been learned, but we don't know what it's going to be,” he says. The future of Russian volumes in Europe depends on the outcome of the war in Ukraine – if it’s a peaceful end, then some Russian supply will still be needed to meet demand and fill supply gaps. If not, then Europe could move quickly to alternative energy sources. “It's impossible for companies like ours to build these facilities in such a short time and get the deliveries of gas in the next few years,” Brouillette says.