ConocoPhillips Bets Big on LNG in US
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ConocoPhillips is increasing its bet on the future of U.S. liquefied natural gas through an agreement to nearly double the amount of fuel it will buy from an export plant Sempra is expanding in Texas.
The oil and gas company is boosting its deal to take 4 million metric tons a year from the expansion phase at Port Arthur LNG in eastern Texas, according to a statement released Aug. 21. The producer is looking to sell more gas internationally to meet growing demand for LNG in Asia and Europe.
The purchase deal is in addition to Conoco’s existing 5 million tons a year from the first phase of the facility, currently under construction. At a combined 9 million tons a year in offtake, this would make Conoco the largest single buyer from Port Arthur.
Sempra is developing Port Arthur through its subsidiary and is looking next to make a final investment decision on the expansion. The project recently received its long-awaited export permit from the Trump administration, which has vowed to quickly approve energy exports. But what’s still needed are the commitments required by banks and financial institutions that would underpin the massive construction costs for building additional LNG exports.
NEWS RELEASE: ConocoPhillips further expands LNG business with additional Gulf Coast offtake agreement — ConocoPhillips News (@cop_newsroom)
The first phase of the facility is slated to produce 13.5 million tons a year, and its expansion would double that capacity. In late July, Japanese energy company Jera also signed a deal for Port Arthur expansion supply for 1.5 million tons a year. Saudi Arabia’s Aramco also has a non-binding accord at Port Arthur’s expansion.
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While Conoco has long sold LNG in Asia from its Australian projects, its participation in U.S. LNG is relatively new.
Conoco did not have existing LNG contracts from the first wave of U.S. projects that came online in the wake of the shale boom more than a decade ago. But as a major producer of unconventional gas assets in the U.S., the company is joining other drillers such as Exxon Mobil Corp. and Chevron Corp. to find new international markets.
The Houston-based producer also has a 30% equity stake in the first phase of the facility, although its statement explicitly said that the company would only participate in offtake for the expansion.
