Saudi Aramco is set to enter the global liquefied natural gas (LNG) market, according to a September 28 statement.
The company is entering this new territory in a bid to diversify its core oil business. Saudi Aramco will enter the global LNG business by acquiring a stake in MidOcean Energy for $500 million, with an option to increase the size of its shareholding.
Bloomberg reports that MidOcean Energy is in the process of acquiring interests in four Australian LNG projects. The company is managed by EIG Global Energy Partners, which was part of a consortium that acquired a 49% stake in Aramco Oil Pipelines Co. in 2021.
The report also noted that Saudi Aramco has been trying to set up LNG operations for a few years after hiring traders in Singapore. It had also negotiated with Russia’s Novatek PJSC as a potential partner for one of its liquefaction projects five years ago.
Amin H. Nasser, Saudi Aramco President & CEO, said:
- “We are pleased to be strengthening our strategic partnership with EIG through this acquisition, which marks Aramco’s first international investment in LNG. We anticipate strong demand-led growth for LNG as the world continues on its energy transition journey, with gas being a vital fuel and feedstock in various industries. We believe that gas will be important in meeting the world’s rising need for secure, accessible and more sustainable energy.”
According to Nasir K. Al-Naimi, upstream president at Saudi Aramco, the decision is an important step in the company’s strategy to become a leading global LNG player because they see significant opportunities in the LNG market, which is positioned for structural, long-term growth.
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MidOcean Energy is a liquefied natural gas (LNG) company formed and managed by EIG, a leading institutional investor in the global energy and infrastructure sectors. De la Rey Venter, MidOcean Energy CEO said that Saudi Aramco has long-term thinking in its DNA and that is key to fostering enduring collaborations as the LNG industry has strong fundamentals for many decades to come.
Saudi Aramco is said to be one of the most successful state oil companies in the world. Recall that in May 2023, Nairametrics reported that Saudi Aramco had emerged as the second-largest company in the world after displacing Microsoft in April 2023. At the time, Aramco’s market value was $2.11 trillion, which is 7.92 trillion Saudi riyals.
Also, Saudi Aramco’s profits for 2022 exceeded the profits of Apple, Microsoft, and ExxonMobil combined.
While commenting on the company’s strong results in Q2/2023 in August, the company CEO, Nasser said that with a recovery anticipated in the broader global economy, ongoing investments in energy projects will be necessary to safeguard energy security.
He also said Aramco is maintaining the largest capital spending program in the company’s history, with the aim of increasing oil and gas production capacity.