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Saudi's Aramco To Buy US Natural Gas From Sempra Energy


Saudi Aramco has signed an agreement to buy U.S. liquefied natural gas from San Diego-based utility Sempra Energy, strengthening the state-owned oil giant’s goal of becoming a player in the growing international gas market.

Sempra LNG and Aramco Services Company, the subsidiaries of the two companies announced that they have signed a heads of agreement, which results in a deal that would see Sempra sell Aramco 5 million tons per year of LNG for the next 20 years. The agreement is subject to further discussion before closure.

Research director at energy and minerals consultancy Wood Mackenzie, Giles Farrer said “If converted to a sales and purchase agreement (SPA), this will be one of the largest LNG deals ever signed and the largest deal signed since 2013.”

The supplies would come from the first phase of Sempra’s Port Arthur LNG facility in Texas, which is under development presently. The agreement will lead to Aramco making a 25% equity investment in the facility.

The agreement is a major stimulation for Sempra, one of several companies trying to develop U.S. facilities to export LNG, or natural gas chilled to liquid form for transport. LNG developers need to line up customers in order to finance the multi-billion dollar export terminals, so the agreement with Aramco makes it more likely that Sempra will green light the Port Arthur facility.

Previously Sempra struck a 20-year deal to sell 2 million tons per year from Port Arthur to the Polish Oil and Gas Company. Once the Aramco deal is closed, Sempra will have locked in buyers for 7 million tons of Port Arthur’s 11 million tons per year of capacity.

Aramco has been exploring natural gas partnerships and assets in North America, the Russian Arctic and Africa as it aims to nearly double its total gas production to 23 billion cubic feet per day over the next 10 years.

Aramco is also growing its business by refining crude oil into fuels like gasoline and diesel. The company, through its subsidiary Motiva, operates the Port Arthur refinery in eastern Texas known as the largest refining facility in the United States.

Several U.S. LNG facilities are currently starting up operations as developers look out new global markets for booming U.S. natural gas supplies. Shipping more LNG is a pillar of President Donald Trump’s goal of making the U.S. the world’s dominant energy exporter.

“We are pleased to partner with affiliates of Saudi Aramco, the largest oil and gas company in the world, to advance the development of Sempra LNG’s natural gas liquefaction facility in Texas and enable the export of American natural gas to global markets,” Jeffrey Martin, chairman and CEO of Sempra Energy, said in a statement.

Port Arthur is one of Sempra’s five LNG development projects in North America. Sempra’s Cameron LNG facility in Hackberry, Louisiana began producing LNG earlier this year. The company ultimately hopes to ship 45 million tons of LNG per year around the world.


Source : Dubaiztime
Posted on :5/28/2019