Australia.Photographer: Ian Waldie/Bloomberg
The world’s biggest oil producer is finally moving to grab a piece of the booming natural gas market, the latest proof that the industry expects the fuel to play a significant part in the energy transition.
In a strategic shift, Saudi Aramco agreed to buy a stake in MidOcean Energy, marking its first investment in liquefied natural gas. MidOcean is in the process of acquiring interests in four Australian LNG projects and is also part of a consortium to buy Sydney-based Origin Energy Ltd.
Other investments may be on the horizon. Aramco’s Upstream President Nasir Al-Naimi said in an email Sunday the company is looking for more acquisitions. Officials have been in talks with exporters in the US this year, according to people with knowledge of the matter.
The Saudi company has been trying to get into the natural gas space for a while. It hired a team of LNG traders in Singapore and was in talks with producers before the Covid pandemic upended negotiations.
Aramco aims to spend $110 billion developing the Jafurah gas field that will help double output by 2030 and make the kingdom a gas exporter for the first time. It’s also weighing exporting that gas as LNG.
A flame burns off waste gas at Saudi Aramco’s Ras Tanura oil refinery.Photographer: Bloomberg
While oil is still a vital part of the Saudi economy, gas is becoming a major part of its investment plans. The reason is obvious: Compared to oil and coal, the future of LNG looks pretty bright in the global energy transition.
Wood Mackenzie expects demand for the alternative fuel to grow by 70% through 2050 under a base scenario. Unlike oil, it isn’t seen peaking for the foreseeable future as the drop in Russian pipeline gas deliveries to Europe is forcing the continent to rely more on LNG.
Saudi Arabia isn’t alone in its push. TotalEnergies SE announced plans last week for billions of dollars of investments through 2028 to expand its LNG portfolio, while Shell Plc and Chevron Corp. are beefing up their gas businesses.
Officials in Riyadh and elsewhere are rushing to prepare for a world where oil demand is no longer growing. And their wallets are making clear signals that the future is gas.
— Stephen Stapczynski, Senior Energy Reporter
Source: Bloomberghttps://www.bloomberg.com/news/newsletters/2023-10-02/saudi-arabia-finally-joins-the-natural-gas-wave
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