Saudi Aramco signs US LNG deal with Sempra

Aramco, the Saudi state oil giant plans to become a major global gas player while the US market is undergoing a shale boom. (File/AP)
Updated 22 May 2019
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Saudi Aramco signs US LNG deal with Sempra

  • Aramco has been developing its own gas resources
  • The proposed Port Arthur LNG Phase 1 project is expected to include two liquefaction trains

DUBAI: Saudi Aramco has entered into a 20-year agreement with US-based Sempra Energy to purchase liquefied natural gas (LNG) from its subsidiary Sempra LNG, the two companies said on Wednesday.
The Saudi state oil giant plans to become a major global gas player while the US market is undergoing a shale boom.
Aramco has been developing its own gas resources and eyeing gas assets in the United States, Russia, Australia and Africa.
The two companies are also finalizing a 25 percent equity investment in the phase 1 of Port Arthur LNG, they said in a joint statement.

 

 The sale-and-purchase agreement is for 5 million tons per annum (mtpa) of LNG from phase 1 of the Port Arthur LNG export project under development, the firms said.
The proposed Port Arthur LNG Phase 1 project is expected to include two liquefaction trains, up to three LNG storage tanks and associated facilities which should enable the export of about 11 mtpa on a long-term basis.
“Port Arthur LNG could be one of the largest LNG export projects in North America, with potential expansion capabilities of up to eight liquefaction trains or approximately 45 mtpa of capacity,” the statement said.
Aramco’s trading arm sold its first LNG cargo on the spot market in late March to an Indian buyer, according to sources familiar with the matter.
Aramco plans to boost its gas production to 23 billion standard cubic feet (scf) a day from about 14 billion scf now.

ANALYSIS

If converted to a sales and purchase agreement, (the Aramco-Sempra deal) will be one of the largest LNG deals ever signed and the largest deal signed since 2013. This is a signal of Aramco’s intent to become a global gas player and develop a broad LNG portfolio.

As the energy transition intensifies, we are seeing oil-focussed national oil companies following major international oil companies by diversifying their exposure away from oil and into gas and LNG.

Further moves into other major LNG provinces by Aramco are likely, with the company rumored to be interested in LNG-focussed acquisitions in Arctic Russia, Australia and other markets. It is unclear what the final destination of Saudi Aramco's LNG will be.

There continues to be a long-term expectation that, in time, Saudi Arabia will import LNG to be used for power generation. However, we expect that Saudi Aramco will use this volume to establish a global portfolio as it seeks to become a global gas player.

— Giles Farrer, Wood Mackenzie Research Director

FASTFACTS

23bn

Aramco's target gas production, in standard cubic feet, up from about 14 billion now.


Lebanon’s Hariri calls for cabinet solidarity in budget debate

Updated 18 June 2019
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Lebanon’s Hariri calls for cabinet solidarity in budget debate

  • The PM said cabinet ministers need to be united and responsible
  • Lebanon’s debt is almost 150% of its GDP

BEIRUT, June 18 : Lebanon Prime Minister Saad Al-Hariri on Tuesday called for parliament to quickly approve the country’s 2019 budget and urged his coalition government to avoid internal disputes.
The cabinet this month agreed a budget plan that shrinks the projected fiscal deficit by 4 percentage points from last year to 7.6% by cutting spending and raising taxes and other fees.
“What I want during the debate is for us to be responsible and united, and not contradictory,” Hariri said in a statement, addressing cabinet ministers as to their comportment during the parliament debate.
Parliament’s finance committee is debating the draft budget and has suggested amendments, local newspapers reported. It will then put the budget to the full assembly to ratify it.
Parliament is mostly composed of parties that are also present in the coalition government and which supported the budget there.
Since the budget was agreed there have been fierce arguments between parties in the coalition over several subjects, though these have not targeted the budget.
Lebanon has one of the world’s heaviest debt burdens, equivalent to about 150% of GDP, and the International Monetary Fund has urged it to cut spending.
“We have held 19 cabinet meetings to agree on this draft budget and these sessions were not for fun, but for deep, detailed debate over every clause and every idea,” Hariri said.
“For this reason, I consider it the responsibility of each of us in government to have ministerial solidarity...to defend in parliament the decision that we have taken together,” he added.
After the 2019 budget is agreed, the cabinet must quickly start working on the 2020 budget and on approving the first phase of a program of investments toward which foreign donors have offered $11 billion in project financing. (Reporting by Angus McDowall, editing by Ed Osmond)