Saudi Aramco and UAE’s ADNOC in talks for US LNG project investments, sources reveal

Gulf Oil Giants Eyeing US LNG Projects Amid Growing Market Competition

Gulf oil titans Saudi Aramco and Abu Dhabi National Oil Company (ADNOC) are reportedly engaging in discussions to invest in U.S. liquefied natural gas (LNG) projects, intensifying their rivalry with oil majors and regional contender Qatar in the thriving super-chilled gas sector. Sources familiar with the matter disclosed the ongoing negotiations.

The energy behemoths are strategically leveraging their fossil fuel reserves, aiming to capitalize on the escalating demand for chilled fuel, projected to surge by 50% by 2030. With the United States emerging as the largest exporter of LNG, inundating European markets with record volumes, Saudi Aramco and ADNOC are eyeing lucrative opportunities stateside.

Reportedly, Saudi Aramco is exploring investment prospects in the second phase of Sempra Infrastructure’s Port Arthur LNG project in Texas, envisaging an expansion beyond the already operational initial phase. Meanwhile, state-owned ADNOC is in talks with U.S. LNG firm NextDecade regarding offtake arrangements from a proposed fourth processing unit at its $18 billion Rio Grande LNG export facility.

Despite these revelations, both Aramco and ADNOC declined to provide comments when approached by Reuters. Similarly, Sempra Infrastructure and NextDecade refrained from disclosing details, citing commercial sensitivities and market speculation.

The U.S. LNG landscape is poised for substantial growth, with capacity projected to nearly double over the next four years. Nevertheless, several U.S. LNG project developers have encountered financial obstacles in launching their export terminals, grappling with heightened investor scrutiny and mounting regulatory pressures on environmental, social, and governance (ESG) considerations.

Sources suggest that Aramco is contemplating the acquisition of liquefaction unit volumes at Port Arthur’s second phase, with each unit capable of producing up to 13.5 million tonnes per annum (mtpa).

In the broader context, Saudi Aramco is striving to propel its global LNG business forward, while ADNOC is already a notable contender in the LNG market. Both entities are vying for supremacy against neighboring Qatar, a dominant force in the global LNG trade. Analysts note QatarEnergy’s ambitious expansion plans, poised to control nearly 25% of the global LNG market share by 2030.

Rystad’s Ramesh remarked, “Both Aramco and ADNOC are the oil heavyweights who could have always done more in LNG… It wouldn’t be a surprise that they will happily unlock their wallet for the right project.”

Recent reports also indicate that Aramco, alongside Shell and other companies, has been shortlisted to acquire significant assets of LNG trading firm Pavilion Energy, signaling potential momentum for its LNG business.

Felix Booth, head of LNG at energy intelligence firm Vortexa, underscored, “This transaction would underpin the demand side of the equation to build a global LNG portfolio, likely linked to U.S. Gulf Coast supply purchases in the near future.”

The intensified competition among Gulf oil giants and the evolving dynamics of the global LNG market underscore the strategic shifts and financial maneuverings underway in the energy sector.