Port Arthur LNG Phase 2 nears FID with ConocoPhillips and JERA on board

ConocoPhillips (NYSE: COP) has expanded its footprint in the global liquefied natural gas (LNG) market with a new long-term offtake agreement for the proposed Port Arthur LNG Phase 2 project in Texas. The American energy major will offtake 4 million tonnes per annum (MTPA) of LNG over a 20-year period from the facility, which is being developed by Sempra Infrastructure, a subsidiary of Sempra (NYSE: SRE).

The agreement, announced on August 22, 2025, adds to ConocoPhillips’ growing LNG portfolio, aligning with its broader strategy to build a diversified, global, and flexible supply network capable of serving high-demand international markets. The LNG will be delivered on a free-on-board basis, with shipments likely destined for European and Asian buyers seeking long-term energy security amid persistent global supply concerns.

How does the new Port Arthur Phase 2 deal expand ConocoPhillips’ global LNG strategy?

ConocoPhillips chairman and CEO Ryan Lance said the deal marks a continuation of the company’s “strategic partnership with Sempra Infrastructure” and reflects its confidence in the Port Arthur LNG platform as a scalable export hub. The Houston-based producer has already committed to 5 MTPA of offtake from Phase 1, alongside a 30% equity stake in that project.

With Phase 2, however, ConocoPhillips will participate solely as an LNG offtaker without a direct ownership stake. Industry observers see this as a sign that the American oil and gas major is prioritizing asset-light, market-driven LNG exposure, reducing capital intensity while maintaining long-term supply optionality.

The latest move follows a series of portfolio expansions, including agreements in Qatar, Australia, and East Africa, as ConocoPhillips targets LNG’s rising role as a transitional fuel supporting decarbonization without sacrificing reliability. Analysts noted that U.S. Gulf Coast infrastructure offers one of the most competitively priced export platforms globally, especially for European utilities and Northeast Asian buyers concerned about geopolitics and Russian supply risks.

What regulatory and construction milestones has Port Arthur LNG Phase 2 already achieved?

The Port Arthur LNG Phase 2 project has already cleared major permitting hurdles, including Federal Energy Regulatory Commission (FERC) approval in September 2023, and a critical non-free trade agreement (non-FTA) export license granted by the U.S. Department of Energy (DOE) in May 2025.

That non-FTA approval is particularly notable because it was the first DOE export license granted after a revised public interest study was completed earlier this year. The decision allows the project to export up to 13.5 MTPA of LNG to countries without free trade agreements with the U.S., significantly broadening its potential customer base.

Sempra Infrastructure CEO Justin Bird described the DOE approval as a “milestone” that positions the project to meet U.S. trade goals while serving allies with secure energy access. The facility is expected to play a key role in narrowing the U.S. trade deficit and bolstering economic growth at state and national levels, according to Sempra.

The project’s planned capacity includes two new liquefaction trains, which will boost the overall nameplate capacity of the Port Arthur LNG complex from 13 MTPA in Phase 1 to approximately 26 MTPA once Phase 2 is completed.

Why are long-term LNG contracts gaining popularity despite global energy transition goals?

The new ConocoPhillips offtake deal joins a series of other long-term contracts secured by Sempra Infrastructure over the past year. In July 2025, Japanese utility JERA Co., Inc. signed a 20-year 1.5 MTPA LNG supply deal from the Port Arthur Phase 2 project, transitioning from a prior non-binding heads of agreement in June.

According to Ryosuke Tsugaru, JERA’s chief low carbon fuel officer, the firm views this agreement as part of a “strategic relationship” with Sempra Infrastructure, strengthening its access to stable LNG volumes amid ongoing volatility in the global gas market. Institutional buyers like JERA have ramped up efforts to diversify procurement sources, with U.S. LNG seen as a dependable and geopolitically safe option.

These long-term deals run counter to earlier trends that favored short-term and spot LNG trading, especially in Europe. However, the disruptions caused by Russia’s invasion of Ukraine, combined with the OPEC+ production policies and volatile Asian demand cycles, have driven renewed interest in 20-year contracts to guarantee physical supply at fixed or hybrid pricing formulas.

What is the commercial outlook for Port Arthur LNG Phase 2 and its construction timeline?

Sempra Infrastructure has positioned the Port Arthur LNG Phase 2 project as “competitively advanced”, with several key milestones already in place. In July 2024, Sempra selected Bechtel for the engineering, procurement, and construction (EPC) contract for the project under a fixed-price agreement, mitigating cost overruns and accelerating final investment decision (FID) preparations.

While FID has not yet been reached, the project’s alignment with multiple signed offtake agreements and regulatory clearances indicates growing momentum. According to Sempra’s latest disclosures, the project remains subject to risks including financing, permitting retention, and completion of commercial agreements.

That said, Phase 1 of the Port Arthur LNG project is already under construction and on track for commercial operations in 2027 and 2028 for Trains 1 and 2, respectively. Future phases beyond Phase 2 are also under early-stage development, though no formal details have been disclosed.

How are investors reacting to ConocoPhillips and Sempra’s growing LNG portfolios?

ConocoPhillips (NYSE: COP) shares have shown relative stability following the announcement, reflecting institutional support for the company’s LNG growth strategy as part of its broader energy transition roadmap. Analysts view the offloading-focused approach of Phase 2 as beneficial for margin stability while reducing risk exposure to construction timelines.

Market sentiment around Sempra (NYSE: SRE) also remains favorable, as the company advances its dual-track energy business—balancing regulated utility assets in California with growth-oriented LNG export infrastructure on the Gulf Coast and in Mexico.

Sempra Infrastructure’s ability to land large-scale agreements with both Western majors (ConocoPhillips) and Asian utilities (JERA, Aramco affiliate) signals strong demand confidence. The Phase 2 project, with export flexibility and geographic diversity, is now viewed as one of the leading U.S. LNG export candidates likely to reach FID in the next 12 months.

What future LNG market trends does the Port Arthur expansion help clarify?

The expansion of the Port Arthur LNG facility reflects a wider structural shift in LNG procurement strategy globally. With European utilities extending contract horizons and Asian buyers increasingly prioritizing reliability, projects like Port Arthur are set to anchor long-duration gas trade routes into the 2040s.

U.S. LNG remains highly attractive due to Henry Hub-based pricing, abundant shale gas reserves, and robust midstream infrastructure. As global gas demand continues to grow in parallel with decarbonization efforts, many governments and corporates are looking to U.S. exporters for auditable, low-carbon, and geopolitically stable energy supply.

Energy analysts also point to U.S. LNG’s potential to undercut Russian pipeline gas in Asia and Eastern Europe, especially as the EU tightens energy dependency frameworks and G7 nations introduce trade alignment policies targeting fossil-fuel diversification.

With both JERA and Aramco-linked entities circling Port Arthur LNG Phase 2, institutional investors are beginning to view these projects not merely as fossil fuel assets—but as geoeconomic leverage tools in a rebalanced global energy matrix.