Oil & Gas

Aramco ventures further into US LNG market

June 27, 2024, 9:41 AM

A ship at Porth Arthur, Texas. The port provides direct access to the Gulf of Mexico for LNG from the Sempra facility — A ship at Port Arthur, Texas. The port provides direct access to the Gulf of Mexico for LNG from the Sempra facility

Aramco to buy 5mtpa of US LNG
Deal with Sempra runs 20 years
US LNG capacity set to double

Saudi Aramco continues its push into the US liquefied natural gas sector with an initial agreement to buy a stake in Sempra’s Texas LNG export plant and for the supply of the fuel.

Aramco has signed a non-binding agreement to buy 5 million tonnes per year of LNG for 20 years and a 25 percent stake in phase 2 of Sempra’s Port Arthur project.

Both companies said they expect to execute a binding agreement and definitive equity agreements.

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The export terminal in Southeast Texas has direct access to the Gulf of Mexico.

Phase one of the project is under construction and consists of two liquefaction trains, two LNG storage tanks and associated facilities.

Phase two will include the addition of up to two trains able to produce up to 13 mpta.

Nasir K Al-Naimi, Aramco’s upstream president, said in a statement that the agreement was a “major step” in Aramco’s strategy to become a leading global LNG player.

Global LNG demand is forecast to grow by 50 percent by 2040, driven by China and South Asia, as industries switch from coal to gas, according to Shell’s LNG outlook.

Saudi Arabia, Qatar and the UAE are building their international LNG portfolios as they step up competition with international oil majors. At the same time they are raising their domestic gas output to meet internal demand for lower-carbon fuel.

As US LNG capacity is set to almost double over the next four years, the market has become an important target for Gulf energy companies, which invest in trading and shipping.

Last week, Aramco signed a deal with US energy company NextDecade to purchase LNG for 20 years, but it lost out to UK rival Shell in its bid to buy Pavilion Energy, a Singapore LNG trader.

Aramco ventured into the global LNG market last September with a $500 million investment in US-based MidOcean Energy.

In 2019, it began a deal with Sempra for a stake in phase 1 of the Port Arthur project, but decided not to pursue the agreement following the Covid-19 pandemic.