Saudi Aramco has made good on its pledge to enter the liquefied natural gas sector by signing a deal to take a sizeable stake in Sempra Energy's proposed Port Arthur LNG export project in Texas.

Under the 20-year heads of agreement (HoA), the Saudi Arabian state oil company will purchase 5 million tonnes per annum of liquefied natural gas from the first phase of the US project.

The agreement also includes the negotiation and finalisation of a 25% equity investment in the first phase of Port Arthur LNG, the pair said.

However, the ultimate participation by Aramco in the project remains subject to finalisation of definitive agreements, according to the Saudi company.

Financial terms of the deal were not disclosed.

“The agreement with Sempra LNG is a major step forward in Saudi Aramco’s long-term strategy to become a leading global LNG player,” Aramco’s chief executive Amin Nasser said.

“With global demand for LNG expected to grow by around 4% per year, and likely to exceed 500 million metric tonnes a year by 2035, we see significant opportunities in this market and we will continue to pursue strategic partnerships which enable us to meet rising global demand for LNG,” Nasser said.

Sempra chief executive Jeffrey Martin said: “We are pleased to partner with affiliates of Saudi Aramco, the largest oil & gas company in the world, to advance the development of Sempra LNG’s natural gas liquefaction facility in Texas and enable the export of American natural gas to global markets.”

Wood Mackenzie research director Giles Farrer added: “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 focused (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 rumoured to be interested in LNG-focused acquisitions in Arctic Russia, Australia and other markets.

“It's 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,” Farrer said.

Aramco has been actively looking to buy natural gas assets in the US amid its push to become a gas exporter.

The company already owns the biggest oil refinery in the US, the Motiva Enterprises plant in Port Arthur, Texas.

The Saudi player, which has also been working to boost domestic natural gas production, previously said it plans to invest around $150 billion under its gas expansion strategy.

Meanwhile, San Diego-based Sempra anticipates taking a final investment decision on Port Arthur LNG this year, with the facility expected to start up in 2023.

The proposed Port Arthur LNG phase one project is expected to include two liquefaction trains, up to three LNG storage tanks and associated facilities that should enable the export of approximately 11 million tpa of LNG on a long-term basis.

The development also has potential expansion capabilities of up to eight liquefaction trains or approximately 45 million tpa of capacity.

Last month, Port Arthur LNG was given the green light from the Federal Energy Regulatory Commission to site, construct and operate the liquefaction export facility and related natural gas pipelines.

In addition, earlier this month, the US Department of Energy issued Port Arthur LNG’s authorisation to export domestically produced natural gas to countries that do not have a free trade agreement with the US.

Poland’s PGNiG has so far signed on to purchase 2 million tpa of LNG from the Sempra-operated facility for a 20-year term, and Korea Gas has signed a memorandum of understanding for potential participation in the project.

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Aramco enters sector with ‘sizeable’ stake in Port Arthur