Saudi Aramco signs US LNG deal with Sempra

Logo of Saudi Aramco is seen at the 20th Middle East Oil & Gas Show and Conference in Manama

Logo of Saudi Aramco is seen at the 20th Middle East Oil & Gas Show and Conference in Manama

Aramco would buy 5 MM tons of LNG a year from Sempra over 20 years if the deal is completed, the companies said in a statement.

Saudi Arabia's state owned oil company will begin buying liquid natural gas from a US company under a 20 year agreement, reflecting the shifting dynamics in the world's energy markets. The gas will be produced from Phase 1 of Sempra's Port Arthur LNG project.

Natural gas in general and LNG specifically are part of Aramco's diversification plans for the future, with the Saudi state company planning to expand quickly into them and away from crude oil, reflecting changing global demand patterns.

The supplies would come from the first phase of Sempra's Port Arthur LNG facility in Texas, which is now under development and would have the capacity to ship 11 million tons of LNG per year.

Under the 20-year sale-and-purchase agreement, Aramco's unit would take five million tonnes per year of LNG off-take from Phase 1 of the Port Arthur LNG export project now under development in the U.S. state of Texas.

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The proposed first phase of the Port Arthur project will include two liquefaction trains, up to three LNG storage tanks and associated facilities, which should enable the export of about 11 MTPA of LNG.

The US has been eyeing opportunities to sell LNG to Saudi Arabia and the UAE, as its shale gas boom creates export opportunities and Arabian Gulf countries seek to meet rising domestic gas needs.

Port Arthur LNG is one of Sempra LNG's five key LNG developments in North America and integral to the company's plans to ramp up its delivery of clean natural gas to the global LNG market. Both the USA and Australia could overtake Qatar as the world's biggest LNG supplier in coming years. There have been media reports for several months now that the Saudi company may join French Total and Chinese CNPC and CNOOC in Novatek's Arctic LNG 2 project, which will have an annual capacity of 19.8 million tons. ASC is a contributor to the US energy sector through employment, partnerships with energy peers and oil services companies, joint industry and academic collaborations, and research and technology development. ASC is committed to being a positive contributor in the communities where its employees live and work, and to making a difference through outreach that benefits the arts, geosciences, education and the environment. We are driven by the core belief that energy is opportunity.

Sempra Energy's mission is to be North America's premier energy infrastructure company. The largest markets for US exports of liquid natural gas in 2018 were South Korea, Mexico and Japan, according to the E.I.A. Past joint ventures with companies like Royal Dutch Shell Plc, Eni SpA and Lukoil PJSC found gas in the kingdom's vast Rub al Khali desert, known as the Empty Quarter, but it was too expensive to develop. Sempra Energy has been consistently recognized for its leadership in diversity and inclusion, and social responsibility, and is a member of the S&P 500 Utilities Index and the Dow Jones Utility Index.

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