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Saudi Aramco is interested in investing in an LNG export facility outside Saudi Arabia and is in early talks with developers aiming to secure a stake in a project in the United States or Asia, Bloomberg reported on Wednesday, quoting sources familiar with the matter.
The Saudi oil giant, the world’s largest oil company by both production and market capitalization, prefers an LNG plant that could easily export the fuel to Asia, according to Bloomberg’s sources.
Apart from investing in a stake, Aramco is also reportedly looking to secure a long-term off-take agreement with the project developer, the sources added.
Going into LNG trading could be another lucrative business for the Saudi oil giant, considering that LNG demand is only set to grow in the coming years as Europe ditches Russian gas and Asia looks to use more natural gas instead of coal.
Amid soaring spot prices, the value of global LNG trade surged to an all-time high in 2022 to $450 billion, the International Energy Agency (IEA) said on Tuesday in its quarterly Gas Market Report Q1-2023.
“Despite rising by a mere 5.5% in volumetric terms, the value of global LNG trade doubled in 2022 to an all-time high,” the agency noted.
Natural gas supply security is now taking centre stage amid a new wave of market reforms in Europe and developed Asian economies, the IEA said.
The significantly higher LNG demand in Europe is set to intensify competition with Asia in the short term and to dominate LNG trade in the longer term, Shell said in its annual LNG outlook last month.
European countries, including the UK, saw their LNG imports jump by 60% last year to 121 million tons, Shell, the world’s largest LNG trader, said as it issued a bullish outlook on the fuel through 2040.
The supermajor warned that another supply-demand gap could be looming in the late 2020s without new investment in additional supply.
Developers of U.S. LNG export facilities could launch $100 billion worth of new plants over the next five years as high prices and the need for energy security create strong momentum for long-term LNG demand and contracts, energy consultancy Wood Mackenzie said in a recent report.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.