Reuters on Wednesday cited unnamed sources as saying that giant Saudi Aramco and Abu Dhabi National Oil Company (ADNOC) are in talks to invest in American liquefied natural gas (LNG) in a quest to compete with Qatar, which lost its ranking to the U.S. in January as the world's largest LNG exporter.
Citing "sources aware of the matter", Reuters said Aramco and ADNOC are attempting to broaden competition with Qatar as demand for LNG is expected to grow by 50% by 2030.
On the Aramco side, talks reportedly center around the Sempra Infrastructure Port Arthur LNG Phase 2 project in Texas. Phase 1 is already producing, and phase 2 has been proposed for expansion.
On the ADNOC side, talks are reportedly in conjunction with NextDecade's proposed fourth processing facility at the Rio Grande LNG export operation and concerns a potential offtake agreement.
Reuters was unable to provide additional detail about the nature of the talks, or whether purchase agreements or equity stakes were being discussed.
Neither Aramco nor ADNOC have responded to Reuters requests for comment.
Reports of these unconfirmed talks come after the Biden Administration in January paused approvals for new LNG projects, and as American LNG faces difficulties in securing financing for new projects.
"The message is: If ESG focussed banks won't finance U.S. projects, someone will," Reuters cited Kaushal Ramesh, Rystad Energy's vice president for LNG research, as saying.
In early January, the U.S. overtook Qatar and the largest LNG exporter in the world, primarily due to the Russian invasion of Ukraine, which forced Europe to quickly change energy gears and intake American LNG to replace Russian gas.
The U.S. started exporting LNG in 2016. Forbes cites LSEG data as showing full-year 2023 American LNG exports had reached 88.9 million metric tons, an increase year-on-year of around 15%.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
Comments
Nobody can compete with Qatar in LNG. It is the world's most successful LNG producer and exporter. The reason is that it has the best integrated LNG industry in the world with the world's third-largest proven reserves of 871 trillion cubic feet (tcf), a huge fleet of LNG tankers, plants to convert gas into LNG and the cheapest producer in the world with all its installations already paid for. Moreover, the recent discoveries in the western part of the huge North gasfield it shares with Iran will enable Qatar to raise its reserves by more than 50% and its production capacity to 142 million tons per year (mt.y) by 2030 and this doesn't include Qatar's investments in LNG in the United States. In a nutshell, no one can compete with Qatar.
The Saudi Energy Minister Prince AbdulAziz bin Salman announced today that the Saudi Jafurah gasfield has 15 tcf of proven gas reserves raising Saudi reserves from the current 212 tcf to 228 tcf. Saudi Arabia plans to use its gas reserves to accelerate its diversification of the economy replacing oil used in electricity generation and water desalination plants with gas and also for use in its huge petrochemical industry.
UAE also has sizeable proven gas reserves amounting to 209 tcf which are being used mostly domestically.
It is therefore obvious that Saudi Arabia and UAE combined and with investments in American LNG can neither compete with Qatar nor would they want to do so.
Moreover, Qatar is a prominent member of the gas exporting countries forum (GECF) which accounts for 63% of global proven gas reserves and which is planning to convert the GECF into an organization for gas similar to OPEC with the intention of regulating the global gas market exactly as OPEC does with the oil market.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert