Saudi Aramco, Sempra sign 20-year LNG offtake deal

Saudi Aramco has signed a non-binding agreement with US energy firm Sempra for the supply of liquefied natural gas (LNG) from Phase 2 of the Port Arthur project in Texas.

The heads of agreement (HoA) will see Aramco buy as much as 5 million tonnes per annum (mtpa) of LNG for 20 years. The state-owned energy giant will also make a 25 per cent equity investment in the proposed Phase 2 expansion.

Aramco and Sempra expect to execute binding LNG and definitive equity agreements with terms substantially equivalent to those in the HoA, subject to a number of conditions.

“We are excited to take this next step into the LNG sector. As a potential strategic partner in the Port Arthur LNG Phase 2 project, Aramco is well-placed to grow its gas portfolio with the aim of meeting the world’s growing need for lower-carbon sources of energy,” said Nasir K. Al-Naimi, Aramco Upstream President.

Al-Naimi said the agreement with Sempra is a major step in the energy firm’s strategy to become a leading global LNG player. It comes at a time when Aramco is seeking to strengthen its position in the LNG market, which is set to grow globally by 50 per cent by 2030, especially in the US, where LNG capacity is set to almost double over the next four years.

Port Arthur LNG is a natural gas liquefaction and export terminal in Southeast Texas with direct access to the Gulf of Mexico. The Port Arthur LNG Phase 1 project is currently under construction and consists of trains 1 and 2, two LNG storage tanks, and associated facilities.

The Port Arthur LNG Phase 2 project is a competitively positioned expansion of the site to include the addition of up to two trains capable of producing up to 13 mtpa.

Meanwhile, Aramco is expanding its portfolio into LNG at a time when global demand for the fuel has surged, particularly in Europe which is replacing reduced pipeline supplies from Russia.

The company forayed into the global LNG market last September by acquiring a minority stake in EIG Partners’ MidOcean Energy in a deal valued at $500m. The state energy giant plans to increase natural gas consumption by 60 per cent by the end of the decade.

Earlier in June, Aramco signed a non-binding agreement with US energy provider NextDecade for the supply of 1.2 mtpa of LNG for 20 years.

Read: Saudi Aramco, UAE’s ADNOC in talks to invest in US LNG projects: Reports