Sempra Infrastructure announced it has signed a 20-year long-term supply agreement with Brazilian state-owned energy company Petrobras for volumes from Port Arthur LNG Phase 2, currently under construction in Texas, United States.
Port Arthur LNG is a liquefied natural gas (LNG) export terminal located on the Gulf Coast of Texas, and the Phase 2 facility covered by this agreement is reported to be currently under construction. Under the agreement, Petrobras is set to receive a portion of the volumes produced at Port Arthur LNG Phase 2 over the next 20 years, according to reports.
The agreement covers approximately 0.8 million tonnes per annum (MTPA), with a contract term of 20 years, according to reports.
Brazil has reportedly continued to expand LNG imports as domestic natural gas production alone has been insufficient to meet demand, and this agreement is reported to be part of Petrobras’ efforts to strengthen its domestic energy supply security by securing US-produced LNG.
LNG export facilities on the US Gulf Coast are reported to be increasingly signing long-term supply agreements with buyers not only in Asia but also in South America, and this agreement is cited as a representative example. The fact that a state-owned energy company like Petrobras, which itself holds substantial oil and gas production capacity, is pursuing long-term overseas LNG contracts is interpreted as evidence of energy security-driven diversification of LNG imports occurring in South America as well. The agreement also covers volumes from a Phase 2 facility still under construction, which aligns with a recent industry practice among US LNG exporters of actively securing long-term offtake agreements ahead of completion to strengthen financing certainty for new facility construction.
The construction progress of the Port Arthur LNG Phase 2 facility, along with its completion and start-up timeline, are the first items to confirm. Also worth watching is whether Petrobras pursues additional long-term US LNG contracts following this agreement, and whether other South American countries and companies expand similar long-term offtake agreements.