Saudi Aramco and Abu Dhabi National Oil Company (ADNOC) are in talks to invest in U.S. liquefied natural gas (LNG) projects, as they step up competition with oil majors and regional rival Qatar in the booming LNG gas market, Reuters reported.
Saudi Aramco is in talks to invest in phase 2 of Sempra Infrastructure's Port Arthur LNG project in Texas, which represents a proposed expansion to the already producing first phase, the sources said, declining to be identified due to the sensitivity of the matter.
Meanwhile, state-owned ADNOC is in talks with the U.S. LNG firm NextDecade for an offtake from a proposed fourth processing unit at its $18 billion Rio Grande LNG export facility, they added.
Aramco and ADNOC declined to comment when contacted by Reuters. Sempra Infrastructure, a subsidiary of Sempra, said it does not comment on commercial matters related to projects under development, while NextDecade said it does not comment on market speculation.
U.S. LNG capacity is set to almost double over the next four years, but several U.S. LNG projects developers have faced financial hurdles to get their proposed export terminals off the ground as investors become more demanding and amid increasing regulatory pressures on banks to focus on environmental, social and governance (ESG).
"The message is: If ESG focused banks won't finance U.S. projects, someone will," Kaushal Ramesh, Rystad Energy's vice president for LNG research said.
Following pressure from climate activists, U.S. President Joe Biden in January paused approvals pending and future applications to export LNG from new projects.
It is not yet clear if the talks with the Aramco and ADNOC are around equity stakes or sale and purchase agreements (SPA), or both.
One of the sources said Aramco is in talks to purchase some or all volumes from one of the two liquefaction units at Port Arthur's second phase, both capable of producing up to 13.5 million tonnes per annum (mtpa).
Saudi Aramco is trying to kickstart its global LNG business. ADNOC is already a player in the LNG market. Both compete with neighboring Qatar.