Aramco to focus all LNG efforts on overseas projects

Reuters/Hamad I Mohammed

• No Saudi gas will be used for LNG
• Interest in US and Australian projects
• Mixed views on sector from analysts

Saudi Aramco intends to expand its liquefied natural gas (LNG) business internationally, as it plans to use all its natural gas production domestically.

CEO Amin Nasser told investors on Monday that the energy major has no intention of building LNG capacity in the kingdom and is discussing opportunities with different entities in the US, Australia and other parts of the world. 

“Expansion for LNG will come from outside markets for the time being,” he noted.

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Aramco’s international LNG push matches moves by regional rivals QatarEnergy and Adnoc. They have also boosted their international LNG investments, despite a recent slump in the sector and mixed opinions about its outlook. 

Shell said last week that it expects global LNG demand to rise by more than 50 percent by 2040, while the International Energy Agency predicted a slowdown.

Aramco, the world’s biggest oil exporter, entered the LNG market last September with a $500 million investment in US-based MidOcean Energy.

It has acquired a minority stake in the company, which is the LNG unit of US-based energy investor EIG.

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Ziad Al Murshed, Aramco’s chief financial officer, said MidOcean is in the process of acquiring four Australian LNG projects that will generate immediate cash flow. This transaction is subject to closing conditions. 

Aramco is also in discussions about investing in the second phase of Sempra Infrastructure’s Port Arthur LNG project in Texas, according to Reuters.

It had previously considered buying 25 percent of Sempra’s facility but it pulled back as Covid-19 impacted the energy sector.

Nasser said Aramco has raised its domestic natural gas output growth target to 60 percent by 2030 from 2021 levels, “but none would be transformed into LNG, at least for now”. The output will be utilised for blue hydrogen, industry and power generation.

Aramco is focusing on Asia for its blue hydrogen and ammonia exports. “Offtake agreements are under discussion in Japan and South Korea,” Nasser said.

The company is also investing internationally in the downstream and has petrochemicals interests in China, Pakistan and Chile.

The demand for petrochemicals has been steadily rising, with a 23 percent increase since 2019, which is around 3 million barrels of liquid to chemicals. 

Demand for transport fuels is expected to reach a five-year high in 2024, Nasser said, adding that around half of Aramco’s upstream production was delivered to downstream operations.

Aramco’s net income fell 25 percent year-on-year to SAR455 billion ($121.3 billion) in 2023.

The company expects a reduction of around $40 billion over five years from its capital investment program as a result of the directive to pause its maximum capacity expansion from 12 million barrels per day to 13 million bpd.