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Saudi Aramco plans a 20-yr LNG deal with Sempra

May 22, 2019
3 min read
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Saudi Aramco’s U.S. unit plans to purchase five million tonnes per annum (mtpa) of liquefied natural gas (LNG) for 20 years from Sempra Energy’s LNG unit.

Aramco Services Company, the U.S.-based subsidiary of Saudi Aramco also signed a heads of agreement for plans to purchase a 25 per cent equity interest in the export facility Port Arthur LNG, Texas from Sempra LNG. The value of the potential deal was not disclosed.

Amin Nasser, Saudi Aramco’s CEO & president, said, “The agreement with Sempra LNG is a major step forward in Saudi Aramco’s long term strategy to become a leading global LNG player. With global demand for LNG expected to grow by around 4 per cent per year, and likely to exceed 500 million metric tons a year by 2035, we see significant opportunities in this market and we will continue to pursue strategic partnerships which enable us to meet rising global demand for LNG.”

 “At Sempra Energy, we are developing one of the largest LNG export infrastructure portfolios in North America, with an eye towards connecting millions of consumers to cleaner, more reliable energy sources,” said Jeffrey W. Martin, chairman and CEO of Sempra Energy. “We are pleased to partner with affiliates of Saudi Aramco, the largest oil and gas company in the world, to advance the development of Sempra LNG’s natural gas liquefaction facility in Texas and enable the export of American natural gas to global markets.”

Giles Farrer, Wood Mackenzie research director, said that if the agreement is finalised, it 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 focussed NOCs following major international oil companies by diversifying their exposure away from oil and into gas and LNG," he added. “Further moves into other major LNG provinces by Aramco are likely, with the company rumoured to be interested in LNG-focussed acquisitions in Arctic Russia, Australia and other markets."

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 of up to eight liquefaction trains or approximately 45 Mtpa of capacity.

Earlier this month, the U.S. Department of Energy issued Port Arthur LNG’s authorisation to export domestically produced natural gas to countries that do not have a free trade agreement with the U.S. Last month, Port Arthur LNG and its affiliates received authorisation from the Federal Energy Regulatory Commission to site, construct and operate the liquefaction export facility and related natural gas pipelines.

Port Arthur LNG is one of Sempra LNG’s five strategically-located LNG development opportunities in North America and is a component of Sempra LNG’s goal of delivering 45 Mtpa of clean natural gas to the global LNG market.

Development of Sempra Energy’s LNG export projects is contingent upon obtaining additional customer commitments, completing the required commercial agreements, securing all necessary permits, obtaining financing, incentives and other factors, and reaching a final investment decision. The ultimate participation by Aramco Services Company and its affiliates in the Port Arthur LNG project remains subject to finalisation of definitive agreements, among other factors, the companies said.

 

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