- Importance of the LNG market
- Programme Vision 2030
Saudi Arabia and the United States, both political and economic allies for decades, continue to deepen their collaboration.
In this case, the progress concerns cooperation on the liquefied natural gas (LNG) market. In this regard, Arab state oil company Saudi Aramco and US energy company Sempra have signed an agreement to supply 5 million tonnes of LNG per year to the Port Arthur LNG phase expansion project, for a period of 20 years.
Port Arthur LNG is a facility located in southeast Texas, in the United States, which allows natural gas to be liquefied and exported, with direct access to the Gulf of Mexico.
The agreement includes Aramco’s 25% participation in the second phase of the project, the two companies said in an official statement.
The first phase of the project, currently under construction, includes two trains, as well as LNG storage tanks and associated infrastructure. The second phase provides for the addition of two trains with a capacity of 13 million tonnes of LNG per year.
The trains are the liquefaction units that transform natural gas into LNG. Each train consists of equipment and processes that cool and condense natural gas into its liquid form for storage and transportation.
“As a potential strategic partner for Phase 2 of the Port Arthur LNG project, Aramco is well positioned to grow its gas portfolio to meet the growing global need for low-carbon energy sources,” said Nasir Al Naimi, President of Aramco Upstream.
“This agreement represents an important milestone in Aramco’s strategy to become a leading global LNG player,” he added.
The United States suddenly became the world’s largest LNG exporterovertaking Qatar in 2023, thanks to the abundance of shale gas reserves accessible through the fracturing process.
“The planned expansion of Port Arthur LNG would facilitate the large-scale distribution of U.S. natural gas to global energy markets,” said Jeffrey Martin, President and CEO of Sempra, as reported by The National.
Importance of the LNG market
Global LNG trade reached 404 million tonnes last year, up from 397 million tonnes in 2022, with supply shortages limiting growth, according to Shell’s 2024 LNG outlook. Shell now intends to strengthen this supply capacity.
According to experts, global demand for LNG is expected to increase by more than 50% by 2040, driven by the increasing shift from industrial coal to gas in China and the increased use of LNG in South and Southeast Asian countries to support economic growth.
Liquefied natural gas (LNG) is natural gas that has been processed for transport in liquid form. It is used to extract economic benefits from remote and isolated reserves, from which it is not profitable to transport the gas directly to the market, either by pipeline or by electricity generation. Natural gas is transported in a liquid state, which makes it profitable, since the volume occupied in these conditions is much smaller than that which it will occupy at the time of consumption. Transport is usually carried out by means of specially adapted ships, called LNG carriers.
Programme Vision 2030
Saudi Arabia’s commitment to liquefied natural gas is part of the overall strategy of the Vision 2030 program, a plan which aims to reduce national dependence on hydrocarbons, the most polluting energy source and whose expiry date has been set by various experts, through the diversification of the economy.
This diversification involves investing in different sectors to generate profits and wealth outside of the oil and coal markets. The Saudi kingdom intends to promote other sectors such as technology, tourism, finance, culture, etc., with a view to having an economy that does not depend solely on oil, the great source of national income for decades .
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