State-owned Saudi Arabian Oil Co., better known as Aramco, is working to secure LNG supply contracts for global trading as it continues to build on a strategy aimed at moving into the world’s natural gas market.
Offtake contracts and a trading portfolio, CFO Ziad Al-Mushed said during the first quarter earnings call, would create a valuable opportunity for the company.
Aramco is owned by the Saudi royal family and is one of the world’s largest integrated energy companies. In recent years, it has been working to boost natural gas output and extend its reach beyond oil into low-emissions fuels, partly by acquiring interests in companies across the world.
Al-Murshed said the company’s move into the global gas market has so far been in small steps, but he stressed the company is building its liquefied natural gas portfolio gradually as it focuses on the quality of its investments in the space.
The company is reportedly in talks to invest in the second phase of Sempra Infrastructure’s Port Arthur LNG facility in Texas.
Aramco made its first investment in the LNG sector last year, taking a minority stake in MidOcean Energy LLC for $500 million. MidOcean holds stakes in the Gorgon, Ichthys, Queensland Curtis and Pluto LNG terminals in Australia. The company also has a stake in Peru LNG.
Al-Mushed said the company is still targeting a 60% increase by 2030 in its natural gas production from 2021 levels. While the company is focused on building its LNG portfolio outside the country, he didn’t rule out the possibility of Saudi Arabian LNG exports.
For now, Aramco is focused on meeting strong domestic demand for natural gas. It has also prioritized developing blue hydrogen and blue ammonia, which is made with natural gas, over LNG. Al-Mushed added that renewables growth is strong in Saudi Arabia, but extra natural gas is for now being used to displace oil and other liquid fuels used for power generation in the country.
In the oil market, management said the supply and demand balance remains tight. Aramco is still confident in its oil demand forecast, which calls for an average of 1.5 million b/d of growth this year and strong growth in 2025 thanks in large part to rising consumption in India and China.
The Saudi government, which oversees the OPEC cartel, last year reduced oil production by 1 million b/d to deal with a glut of oil in global markets. The directive was then extended into 2024.
Aramco reported first quarter net income of $27.3 billion (11 cents/share), compared with profits of $31.9 billion (13 cents) in the year-ago period.
