Saudi Aramco’s deal with Sempra Energy, a US gas export project, indicates the Kingdom’s commitment to continue supporting oil production cuts, Bloomberg reported, citing Brookfield Asset Management Incorporation.
Aramco announced acquiring a 25% stake in Sempra’s Port Arthur liquefied natural gas (LNG) terminal in Texas.
“To the extent that they make downstream investments, I think it’s a good sign on their willingness on the crude side to continue to support the production cuts and extend them,” Jeff Jorgensen, portfolio manager and director of research at Brookfield’s Public Securities Group said.
Aramco’s deal comes in line with the Kingdom’s plan to reduce its economic reliance on crude oil as well as its 2030 vision to diversify the energy resources, Jorgensen added.
Saudi Aramco Services Company, a subsidiary of Saudi Aramco, and Sempra LNG, Sempra Energy’s subsidiary, inked heads of agreement (HoA) earlier. It is expected that under the HoA, a 20-year liquefied natural gas (LNG) sale-and-purchase agreement (SPA) can be finalized. Under the SPA, five million tonnes per annum (Mtpa) of LNG offtake from Phase 1 of the Port Arthur LNG export-project under development.