Saudi Aramco to establish global LNG portfolio

Oil&Gas Materials 23 May 2019 10:53 (UTC +04:00)

Baku, Azerbaijan, May 23

By Leman Zeynalova – Trend:

Saudi Aramco is expected to establish global liquefied natural gas (LNG) portfolio and become a global gas player,Trend reports citing Wood Mackenzie research and consulting company.

The remarks were made as Sempra Energy (NYSE:SRE) and Saudi Aramco announced their respective subsidiaries, Sempra LNG and Aramco Services Company, have signed a heads of agreement (HOA). The HOA anticipates the negotiation and finalization of a definitive 20-year liquefied natural gas (LNG) sale-and-purchase agreement (SPA) for 5 million tonnes per annum (Mtpa) of LNG offtake from Phase 1 of the Port Arthur LNG export project under development. It also includes the negotiation and finalization of a 25 percent equity investment in Phase 1 of Port Arthur LNG.

The proposed Port Arthur LNG Phase 1 project is expected to include two liquefaction trains, up to three LNG storage tanks and associated facilities that should enable the export of approximately 11 Mtpa of LNG on a long-term basis. Port Arthur LNG could be one of the largest LNG export projects in North America, with potential expansion capabilities up to eight liquefaction trains or approximately 45 Mtpa of capacity.

Commenting on the deal, Giles Farrer, Wood Mackenzie Research Director, said that if converted to a sales and purchase agreement (SPA), this will be one of the largest LNG deals ever signed and the largest deal signed since 2013.

"This is a signal of Aramco's intent to become a global gas player and develop a broad LNG portfolio. As the energy transition intensifies, we are seeing oil focused NOCs following major IOCs by diversifying their exposure away from oil and into gas and LNG. Further moves into other major LNG provinces by Aramco are likely, with the company rumoured to be interested in LNG-focused acquisitions in Arctic Russia, Australia and other markets,” he said.

Farrer said it's unclear what the final destination of Saudi Aramco's LNG will be. “There continues to be a long-term expectation that, in time, Saudi Arabia will import LNG to be used for power generation. However, we expect that Saudi Aramco will use this volume to establish a global portfolio as it seeks to become a global gas player.”

To establish its LNG marketing operation, he expects Saudi Aramco to build on its broad expertise in crude oil and products marketing, while also leveraging Saudi Arabia's diplomatic ties. “To facilitate this, Saudi Aramco recently started trading LNG, selling its first LNG cargo into India in April.”


Follow the author on Twitter: @Lyaman_Zeyn