Texas LNG Brownsville LLC said it has signed non-binding term sheets with four independent liquefied natural gas (LNG) buyers in Southeast Asia and China for a combined volume of 3.1 million tonnes per annum (mtpa), which oversubscribes the single-train first phase of its liquefaction project.

Buyers include a mix of state-owned and private entities that currently own, or plan to construct LNG receiving facilities in the next few years. Option rights could increase offtake volumes to 4 mtpa. The project’s first phase is expected to have capacity of 2 mtpa.

“Despite a very challenging global environment, Texas LNG has demonstrated that its realistic size, ideal location, focus on low costs, and transparency have attracted LNG buyers,” said CEO Vivek Chandra. “Buyers realize the value of procuring LNG directly from the producing source, rather than via intermediaries or portfolio players.”

With term sheets in hand, Texas LNG can continue negotiating long-term agreements with the potential LNG buyers.

Houston-based Texas LNG would be paid monthly capacity fees to liquefy gas, store it, and deliver it onto LNG ships arranged by the LNG buyer. Texas LNG is also promoting a sale-purchase agreement structure, whereby it would responsible for delivering LNG on a “free on board” or “delivered ex ship” basis.

The independent company’s first terminal is planned for the Port of Brownsville in South Texas. The 625-acre site is at the north shore of the port’s deepwater ship channel. Production from the project’s first phase is expected to begin in 2021 or 2022.

“Texas LNG is riding the crest of the second wave of U.S. LNG exports,” said COO Langtry Meyer. “Texas LNG’s smaller size helped secure customers for Phase 1 capacity, which is sufficient to reach FID [final investment decision] in 2018.

“With Phase 1 volumes oversubscribed, Texas LNG is marketing its Phase 2 capacity (a second identical 2 mtpa train) and is confident that it will close out the full 4 mtpa production capacity, for which Texas LNG currently is seeking authorizations from the U.S. Federal Energy Regulatory Commission and the U.S. Department of Energy.”

Brownsville has been a hotbed of LNG terminal development interest with multiple projects proposed.