Saudi Aramco, one of the leading crude oil exporters, has agreed on non-binding terms with US energy firm Sempra to purchase 5 million tonnes of liquefied natural gas annually from the Port Arthur LNG Phase Two expansion for 20 years.
The agreement includes Aramco acquiring a 25 per cent stake in the project’s second phase, according to a statement released by both companies.
Port Arthur LNG, situated in south-east Texas and offering direct access to the Gulf of Mexico, is a facility designed for the liquefaction and export of natural gas.
Phase one of the project, currently under construction, includes two liquefaction trains, LNG storage tanks, and associated infrastructure. Phase two will add two more trains capable of producing up to 13 million tonnes of LNG per year.
Liquefaction trains are units that convert natural gas into LNG by cooling and condensing it into a liquid form suitable for storage and transport.
Nasir Al Naimi, Aramco’s upstream president, commented, “As a potential strategic partner in the Port Arthur LNG Phase 2 project, Aramco is well positioned to expand its gas portfolio to meet the increasing global demand for lower-carbon energy sources.”
He added, “This agreement marks a significant step in Aramco’s strategy to establish itself as a leading global player in LNG.”
The United States has rapidly emerged as the world’s top LNG exporter, surpassing Qatar in 2023, driven by abundant shale gas reserves unlocked through advancements in hydraulic fracturing, or fracking.
Jeffrey Martin, Sempra’s chairman and CEO, stated, “Expanding Port Arthur LNG as planned will facilitate widespread distribution of US natural gas across global energy markets.”
Aramco’s move into LNG aligns with efforts by emerging Asian economies to increase natural gas usage and reduce reliance on heavily polluting coal amid expected growth in electricity demand.
Earlier this month, Aramco signed a preliminary agreement to purchase 1.2 million tonnes of LNG annually for 20 years from NextDecade’s Rio Grande LNG export project in Texas.
According to Shell’s 2024 LNG outlook, global LNG trade reached 404 million tonnes last year, up from 397 million tonnes in 2022, with tight supplies limiting growth.
The report also forecasts that global LNG demand will increase by over 50 per cent by 2040, driven by industrial coal-to-gas switching in China and greater LNG consumption in South Asian and Southeast Asian nations to support economic expansion.
