Aramco inks 20-year US LNG deal with Sempra Energy

Bloomberg

Saudi Aramco agreed to a buy a stake in Sempra Energy’s Texas LNG export terminal, giving the world’s biggest oil exporter a foo-thold in the fast-growing global gas trade.
The proposed deal, which also includes an agreement to buy gas from the plant, would mark Aramco’s first entry into production of oil or gas outside Saudi Arabia. Aramco can potentially ship the LNG home to the kingdom’s power plants or trade it globally.
The state-owned company and Sempra signed a preliminary agreement to acquire a 25% stake in the plant, but didn’t disclose the value of the potential deal.
A recent transaction could give a guideline for what the deal is worth. France’s Total SA paid about $1.5 billion for the LNG assets of utility Engie SA, which included shares in Sempra’s Cameron LNG plant in the US.
Saudi Arabia is tapping into the US shale revolution, joining a wave of LNG exporters that will primarily ship the fuel to buyers in Europe and Asia. Sempra itself is working on five projects.
The agreement “is a major step forward in Saudi Aramco’s long term strategy to become a leading global LNG player,” Chief Executive Officer Amin Nasser said in a statement.
“We will continue to pursue strategic partnerships which enable us to meet rising global demand for LNG.”
Aramco sees annual demand for LNG rising about 4% a year and reaching 500 million metric tonnes a year by 2035. Global demand for LNG, which is gas that is super-chilled until it turns to liquid and can be transported by tankers, was 324 million tonnes last year according to BloombergNEF.
Saudi Arabian Oil Co, as Aramco is officially known, would buy 5 million tonnes of LNG a year from Sempra over 20 years if the deal is completed, the companies said in a statement. The gas will be produced from Phase 1 of Sempra’s Port Arthur LNG project. The companies also agreed to negotiate Aramco’s purchase of a 25% stake in that phase.
Aramco traded its first LNG cargo in March and said
it’s seeking gas resources in the US, Russia and Australia, and it began producing gas from shale deposits in the kingdom last year.