Page 6 - GLNG Week 36

GLNG COMMENTARY GLNG
Aramco continues push into LNG
Saudi Aramco is stepping up its participation in the global LNG market, though it still has a long way to go, writes Anna Kachkova
PROJECTS & COMPANIES
WHAT:
Saudi Aramco is tapping its oil-trading contacts as it moves into LNG trading.
WHY:
The company has an extensive network of longstanding customers.
WHAT NEXT:
Aramco has to compete on the spot market
for LNG until it has production of its own.
STATE-OWNED Saudi Aramco – the largest oil exporter in the world – has set its sights on becoming a major player in the gas trade as well. In early September, Bloomberg reported that the company was tapping its extensive network of contacts in the oil trade rst. And indeed it has sold its rst two cargoes of LNG to long-stand- ing crude customers – South Korea’s S-Oil and Indian Oil Corp. (IOC) – according to sources familiar with the matter that were cited by the news service. Aramco is also reported to be in talks with several buyers, including Pakistan, to provide a term deal.
The move into the LNG trade builds on well-established relationships. India has bought nearly 800,000 barrels per day (bpd) of Saudi crude on average over the past two years. Ara- mco is also participating in a giant re ning and petrochemical project in India alongside three domestic state-owned companies – IOC, Bharat Petroleum and Hindustan Petroleum – and Abu Dhabi National Oil Co. (ADNOC).
In South Korea. Aramco is the largest investor in S-Oil.
Long-term strategy
Aramco’s push into LNG comes as global trade of the fuel is booming, spurred by a number of countries switching to cleaner-burning fuels, among other factors. A number of international oil companies (IOCs) are also increasingly
focusing on LNG, and state-owned players such as Aramco are starting to follow suit. As well as wanting to boost its share of the global gas mar- ket, Saudi is keen to diversify beyond oil. To that end, Aramco is pursuing natural gas investments worth $150bn, both at home and overseas, over the next 10 years.
One such investment came in May this year, when Aramco announced it was buying a 25% stake in the rst phase of Sempra Energy’s pro- posed Port Arthur LNG export project in Texas. e Saudi rm also agreed to buy 5mn tonnes per year (tpy) of LNG from the plant over a 20-year period. According to energy consul- tancy Wood Mackenzie, this was Saudi’s rst known non-binding agreement to buy LNG, as well as being the largest such LNG deal since 2013. e project – like many other existing and planned US export facilities – is aimed at tapping cheap, abundant US shale gas as feedstock. Now Aramco has joined the ranks of those seeking to bene t from the US shale gas boom.
Sempra has said that it is aiming to make a nal investment decision (FID) on Port Arthur’s rst phase in early 2020. If it proceeds, the pro- ject could become one of the largest LNG export terminals in North America, with potential expansion capabilities of up to eight liquefaction trains or around 45mn tpy of capacity, according to its backers.
Aramco’s CEO, Amin Nasser, said at the time
Aramco has a stake in the rst phase of Sempra Energy’s proposed Port Arthur LNG export project in Texas, and will buy LNG from the plant.
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Week 36 12•September•2019