Saudi Aramco seeks to strengthen its position in the global LNG market

Saudi Aramco is expected to sign an agreement to purchase liquefied natural gas (LNG) from the US this week. This is part of a long-term strategy to join players such as Shell and TotalEnergies in the LNG market.

Saudi Aramco intends to sign two agreements to purchase liquefied natural gas from the US with Woodside Energy and Commonwealth LNG, according to Reuters.

The Saudi giant, the world’s largest oil exporter, wants to become a major LNG trader. It plans to achieve this goal partly through offtake agreements with US LNG producers and stakes in LNG projects.

The role of the US

The agreements are expected to be signed during Saudi Crown Prince Mohammed bin Salman’s visit to Washington. Aramco is already working with other US players, including NextDecade, which operates and is developing the Rio Grande LNG terminal.

The Saudis’ long-term goal is to trade 20 million tonnes of LNG a year, Aramco CEO Amin Nasser said in August during a conference call with analysts, according to LNGPrime. By comparison, Shell, the world’s largest LNG trader, sold approximately 66 million tonnes last year.

Aramco is expected to secure LNG supplies of up to two million tonnes a year from the planned Commonwealth LNG facility in Cameron, Louisiana. It is also set to acquire a stake in Woodside’s $17.5 billion Louisiana LNG project and sign an offtake agreement for two million tonnes of LNG a year.

LNG as a decarbonisation fuel

Aramco sees LNG as a transition fuel for decarbonisation, particularly in Asia, where it can replace coal and reduce carbon dioxide emissions. In addition to investing in LNG, it is investing tens of billions of dollars in expanding gas production, which it plans to increase by 60–80% by 2030.

Aramco declined to comment on the matter. Woodside also said it does not comment on market speculation and referred to an earlier agreement to explore opportunities for cooperation with Aramco. Commonwealth LNG also did not respond to a request for comment.