The agreement is a major boost for Sempra, one of several companies trying to develop USA facilities to export LNG, or natural gas chilled to liquid form for transport.
Saudi Aramco signed a 20-year agreement to buy liquefied natural gas (LNG) from a forthcoming export terminal in Texas that US -based Sempra Energy is developing, the two companies said on Wednesday.
Aramco will also buy a 25% equity stake in the first phase of the multibillion-dollar project, to be constructed in Port Arthur, Texas, about 90 miles (145 km) from Houston, the companies said.
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 two companies confirmed the deal is a sale-and-purchase agreement for 5 million tonnes per annum (MTPA) of LNG, which is equal to about 0.7 billion cubic feet per day (Bcf/d) of natural gas.
Aramco traded its first LNG cargo in March and said it's seeking gas resources in the U.S., Russian Federation and Australia, and it began producing gas from shale deposits in the kingdom previous year. "We will continue to pursue strategic partnerships which enable us to meet rising global demand for LNG". Qatar is the world's biggest LNG exporter and is a partner with Exxon Mobil Corp.in a $10 billion plant in Texas and has plans to pour a total of $20 billion into USA oil and gas fields.
There are more than a dozen new LNG export facilities proposed for the USA, but only a few terminals in this second wave of development are expected to move forward this year. Port Arthur LNG could be one of the largest LNG export projects in North America, with potential expansion capabilities up to eight liquefaction trains or approximately 45 million tpy of capacity.
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Saudi Aramco has said it plans to increase its natural gas production to 23 Bcf/d, up from its current 14 Bcf/d.
Sempra Energy (NYSE:SRE) and Saudi Aramco today announced their respective subsidiaries, Sempra LNG and Aramco Services Company, have signed a heads of agreement (HOA).
Companies such as Sempra have been looking for investors for LNG projects, but finding buyers to sign long-term deals has been hard. "So far no concrete action; no clear strategy", the trader said.
The proposed Phase 1 project is expected to feature two liquefaction trains, up to three LNG storage tanks and associated facilities that should enable the export of approximately 11 million tpy of LNG on a long-term basis.
Development of Sempra Energy's LNG export projects is contingent upon obtaining additional customer commitments, completing the required commercial agreements, securing all necessary permits, obtaining financing, incentives and other factors, and reaching a final investment decision.
Saudi Arabia burns a lot of crude oil in its electric power sector, and the move could help the country diversify its power mix and potentially export crude oil that it might have burned, said Jonathan Aronson, research analyst at Cornerstone Macro.
The fire that broke out in a commercial building in Surat on Friday was caused by short-circuit, sources said. Deaths in fires are not uncommon in India where many establishments do not comply with fire safety standards.
Subscribe to Squawka's Youtube channel here . "I talked to Mark and to Van Gaal", the Holland global added. In the 2018/19 campaign, Sane made 31 Premier League appearances, with 10 of them coming off the bench.
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