Sumitomo Corporation of Americas (SCOA) has agreed to negotiate with FLNG Liquefaction 4 LLC for a 20-year liquefaction tolling agreement (LTA) from the Freeport liquefied natural gas (LNG) export terminal in Southeast Texas, the companies said Wednesday.

FLNG and SCOA have signed a binding heads of agreement (HOA) for an LTA for 2.2 million tons per annum (mtpa) of LNG that they expect would start in 2023, to coincide with the commencement of commercial operations of Train 4 of Freeport LNG's natural gas liquefaction and export facility located on Quintana Island near Freeport, TX.

The deal would make SCOA, a subsidiary of Japan's Sumitomo Corp., Train 4's first foundation customer, according to Freeport LNG CEO Michael Smith.

"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," Smith said.

The announcement came a week after FERC approved commissioning the first train at the Freeport LNG export terminal in Southeast Texas. Freeport's first three trains are scheduled to enter service sequentially between 3Q2019 and 2Q2020 after being delayed earlier this year. The three trains are designed with the capacity to liquefy roughly 700 MMcf/d.

Prior to the SCOA deal, about 13.4 million metric tons/year (mmty) of capacity has been contracted under use-or-pay tolling agreements with a coterie of mostly Asian customers, including Osaka Gas Co. Ltd., Jera Energy America LLC, BP Energy Co., Toshiba Corp. and SK E&S LNG LLC. In June, Freeport LNG Marketing LLC announced an agreement with Singapore-based Trafigura Pte Ltd. to sell the global trading firm 0.5 mmty from the facility.

A recent NGI analysis found that total estimated U.S. LNG sendout capacity is on track to rise to 3.3 Bcf/d (3.6 Bcf/d assumed intake) by the fourth quarter before surging to 8.2 Bcf/d (9 Bcf/d assumed intake) by 4Q2019. The additional capacity is expected to come from trains starting up at Freeport, along with facility start ups at Elba Island, Cameron LNG, Corpus Christi Liquefaction LLC, and a fifth train at Sabine Pass LNG.

Freeport Train 4 was one of a dozen LNG export terminal projects that were issued environmental schedules by FERC last week.