US LNG export terminal developer, Freeport LNG said on Wednesday it signed a binding heads of agreement with a unit of Japan’s Sumitomo Corporation for 2.2 million tons per annum (mtpa) of LNG from the fourth Freeport train.
Under the deal, Sumitomo Corporation of Americas has agreed to negotiate for a 20-year liquefaction tolling agreement.
The tolling agreement is expected to start in 2023 upon the start of commercial operations of the fourth train of Freeport LNG’s liquefaction and export facility located on Quintana Island near Freeport, Texas, Freeport LNG said in its statement.
The 2.2 mtpa of capacity to be contracted under the tolling deal will enable Sumitomo Corporation of Americas to “significantly expand its U.S. natural gas-related business across the value chain, from upstream development to LNG export,” the statement said.
“We are pleased to announce the start of a long-term relationship with Sumitomo as our first Train 4 foundation customer,” said Michael Smith , Chairman and CEO of Freeport LNG.
“Sumitomo’s significant U.S. gas trading and LNG operations makes it an especially great addition to our outstanding group of existing customers. Sumitomo’s 2.2 mtpa of capacity under this HOA is a major step toward Freeport LNG contracting the approximately 3.5 mtpa needed for financing and commencing construction of Train 4,” he said.
Freeport LNG’s first three trains are expected to enter service between September 1, 2019, and May 1, 2020, after being delayed earlier this year due to the effects of Hurricane Harvey that saw equipment lay-yards flooded.
Each of the three liquefaction trains are expected to have a capacity in excess of 5 million tonnes per year. The fourth liquefaction train will have a similar nominal production.
To remind, Freeport LNG signed a deal in June with the trading company Trafigura to supply 0.5 million tonnes per annum from its liquefaction facility to Trafigura.
Previously, 13.4 mtpa of the plant’s capacity had been contracted to Osaka Gas, JERA, BP, Toshiba and SK E&S.