ConocoPhillips and Sempra Infrastructure Sign Heads of Agreement for Large-Scale LNG Projects and Carbon Capture Activities

ConocoPhillips (NYSE: COP) today announced a potentially significant expansion of its global liquefied natural gas (LNG) business through investment in a new large-scale LNG facility under development by Sempra Infrastructure, a subsidiary of Sempra (NYSE: SRE) (BMV: SRE), in Jefferson County, Texas. ConocoPhillips has entered into a Heads of Agreement (HOA) with Sempra to acquire a 30% direct equity holding in Port Arthur Liquefaction Holdings, LLC and an LNG offtake equivalent to approximately 5 million tonnes per annum (Mtpa) from the Port Arthur LNG project.

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. As one of the top five natural gas marketers in North America, ConocoPhillips will bring extensive commercial expertise and resources to benefit the project. Under the terms of the HOA, ConocoPhillips will supply the gas for its 5 Mtpa offtake and may provide additional gas supply services to the Port Arthur LNG facility. In addition, ConocoPhillips will 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.

“ConocoPhillips has been a driving force in the LNG industry since we helped open the Atlantic LNG market beginning in the 1950s, and then the Asia-Pacific market by delivering the first LNG cargo to Tokyo Bay in 1969,” said Ryan Lance, chairman and chief executive officer. “The decision to enter into this agreement with Sempra provides us with a ground-floor opportunity to participate in premier LNG developments, reinforcing our commitment to helping solve the world’s energy supply needs as we transition to a lower-carbon future. Sempra brings a long history of successful LNG project development, and we look forward to working together to provide reliable LNG to support the energy transition and strengthen U.S. and global energy security.”

“At Sempra, we believe bold new partnerships will be central to solving the world’s energy security and decarbonization challenges,” said Jeffrey W. Martin, chairman and chief executive officer of Sempra. “That is why we are excited to announce this proposed partnership with ConocoPhillips, a leading global energy producer that also shares our vision of responsibly developing and delivering cleaner energy resources.”

The companies will also evaluate development of low-carbon projects, including a carbon capture and storage (CCS) project for the Port Arthur LNG facility, and 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. This future expansion of the existing Energia Costa Azul project is ideally located to supply Asia-Pacific markets.

The referenced HOA is a preliminary, non-binding arrangement, with development of the Port Arthur LNG project subject to concluding definitive agreements and resolving a number of risks and uncertainties, including, among others, signing engineering and construction contracts, obtaining financing and reaching a final investment decision between the parties.

“This HOA aligns with our Triple Mandate, the objectives of which are to reliably and responsibly deliver production to meet energy transition pathway demand, deliver competitive returns on and of capital to our shareholders, and achieve our Paris-aligned targets and 2050 net-zero operational emissions ambition,” added Lance. “We are now positioned among the largest natural gas producers in the U.S. through our recent acquisitions of Concho and Shell’s Permian assets and are interested in expanding our LNG presence. Equity ownership in the Port Arthur LNG project would allow ConocoPhillips to participate in future expansions and lower-carbon activities in line with our own strategic initiatives.”

The use of natural gas in place of coal and refined products represents an opportunity for significant reductions in greenhouse gas emissions across the globe. ConocoPhillips will leverage existing strengths in natural gas marketing and trading and emissions reduction projects in support of the Port Arthur LNG project as well as its growing global LNG portfolio. That portfolio includes the recent announcements of the company increasing its equity share in Australia Pacific LNG to 47.5% and selection as a partner in the North Field East Project in Qatar, further bolstering ConocoPhillips’ presence in the country. The company also licenses its liquefaction Optimized Cascade Process® in 27 trains around the world and has become one of the largest natural gas producers and marketers in North America.

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About ConocoPhillips

ConocoPhillips is one of the world’s leading exploration and production companies based on both production and reserves, with a globally diversified asset portfolio. Headquartered in Houston, Texas, ConocoPhillips had operations and activities in 13 countries, $93 billion of total assets and approximately 9,400 employees at March 31, 2022. Production averaged 1,747 MBOED for the three months ended March 31, 2022, and proved reserves were 6.1 BBOE as of Dec. 31, 2021. For more information, go to www.conocophillips.com.

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