Saudi Aramco In Talks With US LNG Firms To Bolster Gas Trading

Saudi Oil Giant Eyes US LNG Market With Tellurian, NextDecade Talks

by Victor Adetimilehin

Saudi Aramco, the world’s top oil exporter, is in discussions with U.S. firms Tellurian and NextDecade to strengthen its position in the liquefied natural gas (LNG) market, according to sources familiar with the talks. The move comes as the global LNG market is expected to surge by 50% by 2030, with the United States being a key growth market. Analysts predict that this growth will be driven by increasing demand from countries in Asia and Europe, which are seeking to diversify their energy sources away from traditional options like coal.

Aramco Seeks Stake in Tellurian’s Driftwood LNG Plant

Aramco is reportedly in negotiations with Tellurian to acquire a stake in its Driftwood LNG facility, a 27.6 million metric ton per annum (mtpa) plant under construction near Lake Charles, Louisiana. Moreover, Aramco officials have visited the site on multiple occasions this year, including a visit with executives from Australia’s Woodside. An investment by Aramco could provide much-needed capital for Tellurian, which has struggled to finance the construction of the Driftwood plant. Last year, Tellurian warned investors that the company might not be able to cover operating and debt costs due to continued losses and dwindling cash reserves. Industry experts believe that an Aramco investment could provide the financial backing Tellurian needs to complete construction and begin operations.

In separate discussions, Aramco is also exploring a long-term gas purchase agreement with NextDecade for a proposed fifth processing unit at its $18 billion Rio Grande LNG export facility. This agreement would provide Aramco with a steady supply of LNG for export to international markets. Unlike the Driftwood project, which has been impacted by permitting delays, NextDecade’s Rio Grande facility is already operational. A long-term gas purchase agreement with NextDecade would allow Aramco to quickly enter the LNG export market and capitalize on the current strong demand for LNG.

Aramco’s Growing LNG Presence

Aramco’s talks with Tellurian and NextDecade represent a significant step in the company’s strategy to expand its presence in the LNG market. Traditionally, Aramco has been a dominant player in the oil production and export sector. However, the company is now actively seeking to diversify its energy portfolio and capitalize on the growing demand for LNG. This shift in strategy reflects Aramco’s recognition that the global energy landscape is evolving, and that natural gas is likely to play an increasingly important role in the future.

Last year, Aramco made its initial foray into the international LNG market by acquiring a stake in U.S.-based MidOcean Energy for $500 million. Additionally, Aramco was previously reported to be in discussions for a potential investment in Sempra Infrastructure’s Port Arthur LNG project in Texas. These investments demonstrate Aramco’s commitment to expanding its LNG operations in North America, a region that is expected to be a major producer and exporter of LNG in the coming years.

Aramco’s LNG ambitions also extend beyond North America. The company is currently engaged in a bidding war with Shell to acquire the assets of Temasek-owned LNG trading firm Pavilion Energy. A successful bid would give Aramco a foothold in the Singapore-based LNG trading hub, which is a key center for LNG sales in Asia.

These developments underscore Aramco’s commitment to becoming a major player in the global LNG market. The company’s vast financial resources and expertise in the energy sector position it well to capitalize on the projected growth in LNG demand. With strategic investments and partnerships, Aramco is poised to become a significant force in the global LNG market in the years to come.

Source: Reuters

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