State-owned Saudi Arabian Oil Co., better known as Aramco, confirmed Wednesday that it’s working to finalize an agreement to take a 25% equity stake in the second phase of Sempra Infrastructure’s Port Arthur LNG export project in Southeast Texas.
Aramco, which has been working to expand its assets in the global natural gas market, said it signed a non-binding agreement for the equity stake and the purchase of 5 million metric tons/year (mmty) of liquefied natural gas from the Port Arthur LNG expansion project for a term of 20 years.
“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 Aramco Upstream President Nasir K. Al-Naimi. “This agreement is a major step in Aramco's strategy to become a leading global LNG player."
The companies expect to finalize a binding agreement, but said the deals are “subject to a number of conditions.”
Aramco CFO Ziad Al-Mushed said during the company’s first quarter earnings call last month that it is working to secure LNG supply contracts and build a global trading portfolio.
Aramco is owned by the Saudi royal family and is one of the world’s largest integrated energy companies. In recent years, it has been working to boost natural gas output and extend its reach beyond oil into low-emissions fuels, partly by acquiring interests in companies across the world.
The company was rumored to be in talks with Sempra for an ownership stake in the Port Arthur facility.
Sempra sanctioned the first 13 mmty phase of the project last year. It is currently under construction. If it moves ahead, the second phase would add another two liquefaction trains and an additional 13 mmty of capacity.
ConocoPhillips, which owns a 30% equity stake in the first phase, confirmed last month that it was exploring the sale of its position given the interest it’s received in the stake.
Aramco made its first investment in the LNG sector last year, taking a minority stake in MidOcean Energy LLC for $500 million. MidOcean holds stakes in the Gorgon, Ichthys, Queensland Curtis and Pluto LNG terminals in Australia. The company also has a stake in Peru LNG.
Earlier this month, Aramco signed a tentative deal to buy 1.2 mmty of LNG from an expansion at NextDecade Corp.’s Rio Grande LNG export facility under construction in South Texas.
