Saudi Arabia’s Aramco and Abu Dhabi National Oil Company (ADNOC) have been in discussions to invest in US liquefied natural gas (LNG) projects, according to Reuters.
With the demand for chilled fuel expected to increase by 50% by 2030, both energy giants are looking to capitalize on their fossil fuel resources while they can.
Saudi Aramco is in talks to invest in the second phase of Sempra Infrastructure’s Port Arthur LNG project in Texas, an expansion of the already operational first phase.
Meanwhile, state-owned ADNOC is also in discussions with US LNG firm NextDecade for an offtake from a proposed fourth processing unit at its $18 billion Rio Grande LNG export facility.
The US is expected to almost double its LNG capacity over the next four years. However, several US LNG project developers have faced financial challenges in getting their proposed export terminals off the ground. This is due to increasing demands from investors and regulatory pressures on banks to focus on environmental, social, and governance (ESG) factors.
Kaushal Ramesh, Rystad Energy’s vice president for LNG research, stated, “The message is: If ESG-focused banks won’t finance US projects, someone will.”
Following pressure from climate activists, US President Joe Biden in January paused approvals pending and future applications to export LNG from new projects.
It is not yet clear if the discussions with the Gulf oil giants are centered around equity stakes, sale and purchase agreements (SPA), or both. Aramco is in talks to purchase some or all volumes from one of the two liquefaction units at Port Arthur’s second phase, which can produce up to 13.5 million tons per annum (mtpa), as Reuters reported.
Rystad’s Ramesh commented, “Both Aramco and ADNOC are the oil heavyweights who could have always done more in LNG… It wouldn’t be a surprise that they will happily unlock their wallet for the right project.”
Felix Booth, head of LNG at energy intelligence firm Vortexa, stated, “This transaction would underpin the demand side of the equation to build a global LNG portfolio, likely linked to US Gulf Coast supply purchases in the near future.”
