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Saudi Aramco struck a deal with U.S. Sempra Energy to buy 5 million tons of liquefied natural gas annually from Sempra’s Port Arthur LNG plant, Reuters reports, citing the two companies, which confirmed an earlier report in the Wall Street Journal.
The Port Arthur facility has yet to be built and Aramco has also negotiated a 25-percent stake purchase in its first phase of development. The project includes the construction of two liquefaction trains along with up to three storage tanks and the relevant infrastructure.
Sempra has five LNG projects under development right now, in Louisiana, Texas, and Mexico, that together will have the capacity to produce 45 million tons of LNG, The company’s CEO told Reuters in March. That’s more than what Cheniere Energy, the current leader in this space, plans to have in terms of capacity at its two LNG plants in Sabine Pass and Corpus Christi.
Yet now, according to the joint statement, the Port Arthur facility’s capacity alone could be expanded to 45 million tons annually. According to the statement, “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.”
“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,” Aramco and Sempra said in a joint statement.
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Natural gas in general and LNG specifically are part of Aramco’s diversification plans for the future, with the Saudi state company planning to expand quickly into them and away from crude oil, reflecting changing global demand patterns.
U.S. LNG is an obvious choice for the company, especially after the European Union pledged to boost its imports of U.S. LNG twofold within five years. However, Aramco is also eyeing a stake in Russian LNG. There have been media reports for several months now that the Saudi company may join French Total and Chinese CNPC and CNOOC in Novatek’s Arctic LNG 2 project, which will have an annual capacity of 19.8 million tons.
Total and the two Chinese companies have already agreed to buy 10 percent each in the project, which leaves another 10 percent for Aramco, since Novatek wants to retain a 60-percent interest in the project.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.