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U.S. energy giant to boost LNG output as countries cut out Russia

Sempra plant, backed by Mitsui, to up production by 60% and export more to Europe

Sempra Infrastructure hopes to increase annual production at its Cameron LNG plant in Louisiana by nearly 7 million tons and to export more to Asia and Europe, which is trying to cut its dependence on Russian gas.

HOUSTON, U.S. -- U.S. energy giant Sempra Infrastructure will increase production of liquefied natural gas in the south of the country, which it operates jointly with Japan's Mitsui & Co. and other companies, by about 60% from the current level to about 19 million tons per year in 2027.

The company hopes to export the increased output to Europe and Asia. Europe, particularly Germany and Italy, is trying to wean itself of its energy dependence on Russia following the Kremlin's invasion of Ukraine.

Sempra President Dan Brouillette revealed the plans in an interview with Nikkei. The company will increase the annual production capacity of its Cameron LNG plant in Louisiana by 6.75 million tons. The company will not disclose the size of the investment but it is estimated to be billions of dollars.

In January, the company applied to the Federal Energy Regulatory Commission for a permit to expand the plant. Construction will begin in 2023 on the liquefaction facility.

Cameron is one of the largest LNG plants in the U.S. Sempra holds a 50.2% stake in the plant, while Mitsui, Mitsubishi Corp., and NYK Line collectively hold 33.2%, and TotalEnergies of France owns 16.6%. The Japanese government is another backer of the project, with the Japan Bank for International Cooperation providing the financing.

Japanese companies such as JERA and Kansai Electric Power buy more than 10% of the plant's output under long-term contracts. The Cameron plant also sells LNG to Taiwan and Europe.

While Europe wants to cut its dependence on Russian gas, it is likely to face a shortfall of 40 million tons, or 10% of its demand, this year, even if it imports all the spare capacity from North America and Africa.

Brouillette said the U.S. and other countries are not producing enough gas to meet global demand. However, he pointed to the economic viability of increasing production, given current high prices and increasing needs.

Indeed, new gas fields are being developed in the U.S., Qatar, and other countries, and the shortfall is expected to narrow by around 2027.

In the U.S., natural gas production is rapidly increasing due to the "shale revolution" to extract oil and natural gas trapped in deep underground rock layers. The country is expected to overtake Qatar and Australia to become the world's largest LNG exporter this year.

Although the trend to build new plants had been slow over the past few years due to falling oil prices and the move toward decarbonization, investment is expected to resume in 2022 and 2023 as the global economy recovers from the COVID-19 pandemic and the shock to the market from Russia's invasion of Ukraine.

Sempra's total group sales is about $12.9 billion. Through its holding company, it is involved in a wide range of energy businesses, including LNG and power plant operations.

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