Oil giant Aramco is in talks with U.S. firms Tellurian and NextDecade on two separate LNG projects as the Saudi firm seeks to boost its gas trading and production, three sources close to the talks told Reuters.
U.S. gas production has boomed over the past decade with oil majors and Aramco's rivals such as Qatar's QE competing to build several projects to export gas to Europe and Asia.
The state energy firm is in talks with Tellurian to buy a stake in its 27.6 million metric ton per annum (mtpa) Driftwood LNG plant near Lake Charles, Louisiana.
Aramco officials visited the site three times last month - including together with executives from Australia's Woodside on one of those occasions, said the sources who declined to be identified as talks are not public.
Aramco is also in talks with U.S. LNG firm NextDecade for a long-term gas purchase agreement from a proposed fifth processing unit at its $18 billion Rio Grande facility. Aramco declined to comment. Tellurian said it does not comment on market speculation. Woodside said it continuously assesses organic and inorganic growth opportunities but declined further comment. NextDecade did not immediately respond to Reuters request for comment.
Aramco is seeking to strengthen its position in the LNG market, which is set to grow by 50% by 2030, especially in the United States, where LNG capacity is set to almost double over the next four years.
Tellurian has spent years and hundreds of millions of dollars on trying to finance and build the Driftwood plant.
Last fall, Tellurian warned investors that continued losses and dwindling cash reserves might not be enough within a year to cover operating and debt costs.
Aramco is one of the world's largest oil producers and top exporter, pumping nearly 10% of the world's crude supply.
However, its presence in the LNG market is dwarfed by neighbouring Qatar. UAE's ADNOC also has a bigger presence.
Aramco made its first LNG investment abroad when it bought a stake in U.S. MidOcean Energy for $500 million last year.
In March, Reuters reported that Aramco was in talks to invest in Sempra Infrastructure's Port Arthur project in Texas.
It is also competing with Shell to buy the assets of Temasek-owned LNG trading firm Pavilion Energy.
(reuters.com, June 4, 2024)
