Monday, March 11, 2024

Aramco and ADNOC Eye US LNG Projects 

With expectations for liquefied natural gas (LNG) demand to surge by 50% by 2030, the Gulf oil and gas giants are exploring opportunities in the US.

Saudi Aramco and Abu Dhabi National Oil Company (ADNOC) are in negotiations to invest in US LNG projects, reported Reuters, citing sources.

With expectations that LNG demand will surge by 50% by 2030, the Gulf oil giants are exploring opportunities in the US.

Recently, the US become the leading LNG exporter globally, especially as it delivers record volumes to Europe.

Aramco is in talks regarding phase two of Sempra Infrastructure’s Port Arthur LNG project in Texas, the sources said.

This phase is an expansion of the operational first phase.

Concurrently, ADNOC is in discussions with US LNG company NextDecade concerning an offtake from a proposed fourth processing unit at the $18bn Rio Grande LNG export facility.

Both Aramco and ADNOC refrained from commenting on these discussions.

NextDecade stated it does not comment on market speculation, while Sempra Infrastructure, a subsidiary of Sempra, stated it does not comment on commercial considerations pertaining to projects in development.

The US is on track to nearly double its LNG capacity within the next four years.

However, financial challenges have impeded several US LNG project developers from advancing their export terminals.

This is due to increased investor scrutiny and regulatory pressures on banks to prioritise environmental, social and governance considerations.

In response to environmental concerns, US President Joe Biden halted approvals for new LNG export projects in January.

Details regarding whether the talks with Saudi Aramco and ADNOC involve equity stakes or sale and purchase agreements remain unclear.

One source mentioned that Aramco might acquire some or all of the output from one of the two liquefaction units planned for Port Arthur’s second phase, each with a production capacity of up to 13.5 million tonnes per annum.

Aramco is actively seeking to establish its presence in the global LNG market, while ADNOC is already an established player.

Both are in competition with Qatar, a dominant player in the global LNG export market.

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