Sempra (SRE) Just Locked In Two Decades of LNG Demand

Sempra (SRE) Just Locked In Two Decades of LNG Demand

Sat, September 19, 2026 at 9:34 PM GMT+3 4 min read

• SRE -1.06%
• PBR-A -0.63%

On September 14, Sempra Infrastructure, a subsidiary of Sempra (NYSE:SRE), signed a 20-year deal to sell roughly 0.8 million tonnes of liquefied natural gas a year to Petrobras, marking the first time a South American company has signed on as an LNG customer. The gas will flow from Port Arthur LNG Phase 2, a Texas project still years from completion, which tells you this is a bet on where global energy demand is headed rather than a quick win. Combined with a stronger-than-expected second quarter and record electricity demand in Texas, this looks like a company trying to grow in several directions at once.

A Bet That Pays For Decades

Sempra Infrastructure's Petrobras contract runs for two decades, locking in demand long before Port Arthur LNG Phase 2 ships its first cargo. The project reached a positive final investment decision in September 2025 and is expected to bring its two liquefaction trains online in 2030 and 2031, adding about 13 million tonnes of capacity and nearly doubling the total Port Arthur facility to roughly 26 million tonnes a year. Petrobras becomes Sempra Infrastructure's first South American customer, widening a buyer base and reinforcing what the company calls a dual-coast strategy serving both the Atlantic and Pacific Basins.

The growth story extends well beyond LNG. Sempra's second-quarter 2026 GAAP earnings jumped to $1.21 per diluted share from $0.71 a year earlier, and adjusted earnings rose to $1.16 from $0.89. In Texas, Oncor is riding a genuine demand surge: ERCOT set an all-time peak load of 91 gigawatts in July, and regulators have endorsed more than $7 billion of new transmission spending to support 16 gigawatts of that growth. A newly approved interconnection process, Batch Zero, could make roughly 44 gigawatts of large-load requests in Oncor's territory eligible for service, more than 140% above the grid's current 31-gigawatt peak. Management raised full-year GAAP EPS guidance to a range of $5.02 to $5.55 and kept its 7% to 9% long-term earnings growth target intact.

The Long Wait Until Payoff

The Petrobras volumes do not start moving until Port Arthur LNG Phase 2's trains enter service in 2030 and 2031, so the newly signed contract does not touch near-term cash flow. Sempra is still finishing Phase 1 of the same project, with commercial operations not expected until late 2027 and 2028, and the company describes further expansion phases as only in early development. That is a lot of construction risk stacked on a single Texas site before any of the new LNG revenue shows up.

Funding all of it is its own challenge. Sempra's five-year capital plan calls for roughly $65 billion of spending, and the company is leaning on asset sales to help cover it, including a deal to sell 45% of Sempra Infrastructure Partners to KKR affiliates and a separate sale of its Ecogas México unit, both still working through final approvals. Sempra's own earnings reconciliation flagged a real drag from currency and inflation swings tied to its Mexican operations, a reminder that part of the business sits outside the steadier regulated returns of Texas and California. Meanwhile, key California rate decisions covering 2028 are still pending before regulators, so a meaningful share of future earnings still depends on approvals Sempra does not fully control.

What The Smart Money Sees

Hedge fund ownership of Sempra fell from 51 funds to 46 in the most recent quarter, a pullback even after a strong earnings beat. Shares trade at a forward price-to-earnings ratio of 14.58, as of September 18, a modest multiple for a company promising 7% to 9% annual earnings growth. Short interest sits at just 1.80% of the float, showing little organized bearishness. That combination, fewer funds holding on but barely any short pressure, suggests skepticism here is more about rotation than conviction that the stock is overvalued.

Where The Story Goes From Here

Sempra now has two growth engines running at once: a Texas grid absorbing record demand today and an LNG business signing gas contracts that will not ship until the next decade. The Petrobras agreement adds another long-term customer to a project still years from full construction. For the LNG bet to pay off, Port Arthur's later phases need to reach service on schedule without the funding gaps or currency swings already surfacing elsewhere in the business. For the Texas growth to keep compounding, regulators still need to sign off on the transmission and rate cases working through the pipeline. Both stories stretch years into the future, and neither is finished yet.

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