Aramco enters global LNG market with stake in MidOcean Energy

Image courtesy: Simon Dawson/ Getty Images

Saudi Aramco, the world’s biggest oil producer, has forayed into the global liquefied natural gas (LNG) with the acquisition of a minority stake in EIG Partners’ MidOcean Energy in a deal that is valued at $500m.

The agreement builds on the relationship with EIG, which was part of a consortium that acquired a 49 per cent stake in Aramco Oil Pipelines Company, for $12.4bn in 2021.

“We are pleased to be strengthening our strategic partnership with EIG through this acquisition, which marks Aramco’s first international investment in LNG,” said Amin H. Nasser, Aramco president & CEO.

Aramco is expanding its portfolio into LNG at a time when global demand for the fuel has surged, particularly in Europe which is replacing reduced pipeline supplies from Russia.

“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,” said Nasser.

The state-owned energy giant has the option to increase its shareholding and associated rights in MidOcean in the future. The completion of the deal is subject to regulatory approvals.

MidOcean is currently in the process of acquiring interests in four Australian LNG projects, with a growth strategy to create a diversified global LNG business.

Aramco expands energy portfolio

Meanwhile, Aramco has been stepping into other energy businesses. The company is targeting capital expenditure of $45bn to $55bn for 2023.

Earlier in September, the oil producer agreed to acquire a 100 per cent equity stake in Esmax Distribusción (Esmax) from Southern Cross Group. Esmax distributes Petrobas fuel in Chile.

The state-energy firm said the transaction is subject to certain customary conditions, including regulatory approvals.

The transaction will give Aramco access to retail fuel stations, airport operations, fuel distribution terminals and a lubricant blending plant.

Aramco purchased a stake in a 211,000 barrels-a-day refinery in Poland in January as it looks to take advantage of Europe’s pivot away from Russian energy supplies.

In July, the Dhahran-based firm also completed the SAR784bn acquisition of a 10 per cent stake in China’s oil refining giant Rongsheng Petrochemical (Rongsheng) through its subsidiary, Aramco Overseas Company.

The deal includes the supply of 480,000 barrels per day of Arabian crude oil to Rongsheng-controlled Zhejiang Petroleum and Chemical Company for 20 years.

Aramco raised its dividends to investors and Saudi Arabia’s government by more than half to $29.4bn, including a performance-linked portion, up from a regular dividend of $18.8bn a year ago.

The company’s net income plunged by 29.5 per cent to SAR214.3bn compared to SAR278bn a year ago.

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