ConocoPhillips, Sempra Infrastructure In Deal For LNG Projects And Carbon Capture Activities

ConocoPhillips (COP), an oil and gas exploration and production business on Thursday announced the signing of a Heads of Agreement (HOA) with Sempra to acquire a 30 percent direct equity holding in Port Arthur Liquefaction Holdings, LLC and an LNG offtake equivalent to approximately 5 million tons per annum (Mtpa) from the Port Arthur LNG project.

HOA is a preliminary, non-binding arrangement, with development of the Port Arthur LNG project subject to concluding definitive agreements and other formalities.

The large-scale LNG facility is under development by Sempra Infrastructure, a subsidiary of Sempra (SRE), in Jefferson County, Texas. The first phase of the project is fully permitted and expected to include two liquefaction trains and LNG storage tanks, as well as associated facilities capable of producing, under optimal conditions, up to approximately 13.5 Mtpa of LNG.

Under the terms of the HOA, ConocoPhillips would supply the gas for its 5 Mtpa offtake and may provide additional gas supply services to the Port Arthur LNG facility.

In addition, ConocoPhillips would have the option to acquire certain LNG offtake and equity ownership from future contemplated LNG trains at the Port Arthur LNG site, where a similarly sized Phase 2 project is also under development.

The companies would also evaluate the development of low-carbon projects, including a carbon capture and storage (CCS) project for the Port Arthur LNG facility. Sempra Infrastructure would have the opportunity to participate in carbon capture and sequestration projects developed by ConocoPhillips in Texas or Louisiana in connection with the Port Arthur LNG project.

Additionally, the HOA provides an opportunity for ConocoPhillips to acquire offtake and equity participation in Sempra's development of the Energia Costa Azul LNG Phase 2 Project to be located north of Ensenada, Baja California, Mexico.

Shares of ConocoPhillips are currently trading in pre-market at $81.69, down $1.42 or 1.71 percent from the previous close. Shares of Sempra are trading in pre-market at $147.50, up $0.77 or 0.52 percent from the previous close.

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