LNG

Saudi Arabia, the latest entrant into the LNG market with two supply contracts signed in Texas, has discovered seven more oil and gas fields in the Kingdom’s Eastern Province and in the Empty Quarter.

Saudi Energy Minister Prince Abdulaziz bin Salman said Saudi Arabian Oil Company (Aramco) had just discovered “two unconventional oil fields, a reservoir of light Arabian oil, two natural gas fields, and two natural gas reservoirs” in recent weeks.

Two unconventional oil fields and one reservoir were discovered in the Saudi Eastern Province while the two natural gas fields and two gas reservoirs are in the Empty Quarter.

The “Ladam” unconventional oil field was discovered in the Eastern Province after the flow of very light Arabian oil in the Ladam-2 well at a rate of 5,100 barrels per day, accompanied by about 4.9 million standard cubic feet of gas per day.

In addition to having much more oil and gas than Texas, Aramco was still happy to sign to supply agreements with the Port Arthur LNG project and the Rio Grande LNG joint venture.

Discoveries list

Outlining its own recent discoveries, Aramco added that the “Al-Farouk” unconventional oil field was discovered in the Eastern Province after Arab ultra-light oil flowed from the Al-Farouk-4 well at a rate of 4,557 barrels per day, accompanied by about 3.79 million standard cubic feet of gas per day.

The “Unayzah” reservoir was discovered in the “Mazalij” field in the Eastern Province, after Arab Light oil flowed from the Mazalij-62 well at a rate of 1,780 barrels per day, accompanied by about 0.7 million standard cubic feet of gas per day.

The “Al-Jahaq” resources were found in the Empty Quarter after natural gas flowed from the “Al-Arab-C” reservoir in Al-Jahaq-1 well at a rate of 5.3 million standard cubic feet per day, and from the “Al-Arab-D” reservoir in the same well at a rate of 1.1 million standard cubic feet per day. 

The Empty Quarter is the largest continuous sand desert in the world and is almost the size of France, covering about 650,000 square kilometres of arid and inhospitable terrain - containing nothing but oil and gas.

The “Al-Katuf” field was discovered in the Empty Quarter after natural gas flowed into Al-Katuf-1 well at a rate of 7.6 million standard cubic feet per day, accompanied by about 40 barrels per day of condensate.

The “Hanifa” reservoir was found in the “Asikra” field in the Empty Quarter after natural gas flowed in the Asikra-6 well at a rate of 4.9 million standard cubic feet per day.

LNG deals

Aramco has signed a second US LNG accord to receive volumes from another Texas export, the Port Arthur liquefaction joint venture in Texas being developed by Sempra Infrastucture, and has followed up on a deal signed earlier in June with the Rio Grande export project in the Port of Brownsville.

Sempra has signed a non-binding Heads of Agreement as part of a 20-year deal for Aramco to offtake 5 million tonnes per annum from the Port Arthur LNG Phase Two expansion.

The accord also contemplates Aramco taking a 25 percent participation in the project-level equity of Phase Two.

The Aramco deal with the Port Arthur project follows an earlier accord signed by the Saudis in mid-June 2024 with NextDecade Corp., the developer of the Rio Grande LNG export plant in Texas.

Aramco and NextDecade confirmed a non-binding accord for the supply of cargoes from the future Train 4 of the Rio Grande plant being constructed at the Port of Brownsville.

That Heads of Agreement was for 20 years and was also with the upstream division of Aramco.

The Rio Grande project is located on 984 acres of land which has been leased long term and includes 15,000 feet of frontage on the Brownsville Ship Channel. 

Zachry Holdings, the lead contractor in the $10 billion project to transform the Golden Pass LNG terminal in Texas into an export plant for a joint venture comprising QatarEnergy and ExxonMobil has filed for Chapter 11 bankruptcy protection.

Equinor, the Norwegian oil and gas major and main pipeline natural gas supplier to Europe amid diminishing Russian deliveries from Gazprom, will be an LNG trader with additional volumes supplied by the largest US LNG exporter Cheniere Energy.

Under a planned 15-year agreement Equinor will purchase around 1.75 million tonnes of LNG per annum from Houston-based Cheniere from 2026.

“This new Sales and Purchase Agreement (SPA) will add new volumes to Equinor’s already significant gas portfolio of pipeline gas and LNG,” stated Equinor.

The Norwegian company also disclosed that the expansion at Corpus Christi to add 10 MTPA to the current nameplate capacity of 13.5 MTPA will likely be followed by another boost in output.

“With global energy demand growing and increased focus on energy security, the LNG market is expected to grow significantly. US LNG can supply the European markets as well as cover demand in other markets,” explained Equinor.

The Stavanger, Norway-based oil and gas major has recently shipped the first cargo from the repaired Hammerfest in Northern Norway to re-established seaborne LNG supply link Europe.

New US volumes

It was the first cargo to leave the Hammerfest liquefaction and export plant since the September 2020 fire.

Once the Hammerfest is ramped up to full production of 4.8 MTPA, a ship will leave the facility on Melkøya island every five or six days and over the year will deliver 5 percent of Norway’s natural gas exports while the other 95 percent is delivered by pipelines.

Norway’s role as a key supplier to Europe has taken on more importance because of the Russian invasion of Ukraine and Western sanctions against Russian oil and gas.

The Hammerfest project gave Europe its first large-scale LNG supply when it came on stream in 2007, though the facility was originally planned and built to supply the US before the shale-gas boom.

“I am very pleased that we have entered into a long-term agreement with Cheniere, the largest US producer of LNG,” said Helge Haugane, Equinor’s senior vice president Gas & Power.

“Based on our production in Norway, Equinor is the second-largest supplier of pipeline gas to Europe. The new LNG agreement is a major building block in Equinor’s ambition to further strengthen our global gas position by adding more LNG to the portfolio,” Haugane explained.

Crucial role

“LNG will play a crucial role in providing energy security. By increasing our position in this segment, we will be even better positioned as a long-term reliable supplier of energy’ he stated.

Under the SPA, Equinor has agreed to purchase the volumes from Cheniere Marketing on a free-on-board basis whereby the Norwegians send their own ships.

Equinor said the deliveries under the SPA would start in the second half of 2026 and reach the full 1.75 MTPA in the second half of 2027.

“Half of the volume, or about 900,000 tonnes, is subject to Cheniere making a positive final investment decision to construct additional liquefaction capacity at the Corpus Christi LNG Terminal beyond the seven-Train Corpus Christi Stage III Project,” stated Equinor.

This suggests that the Cheniere, which operates the Sabine Pass plant in Louisiana with 27 MTPA of production, is planning yet another expansion at the Texas facility.

Cheniere Energy, the largest US liquefied natural gas exporter from plants at Sabine Pass in Louisiana and Corpus Christi in Texas, has signed a sale and purchase agreement with ENN Group, the leading non-state energy company in China with LNG and growing city-gas assets.

The ENN LNG marketing unit based in Singapore will purchases 900,000 tonnes per annum of LNG from Cheniere Marketing on a free-on-board basis for a term of 13 years beginning in July 2022.

The purchase price for the LNG is indexed to the US benchmark Henry Hub price, plus a fixed liquefaction fee.

Acting as guarantor of the agreement will be the natural gas units in the ENN Group, which owns the Zhoushan LNG import terminal in the Zhejiang Free Trade Zone in eastern China.

“We are pleased to announce this long-term LNG contract with ENN, a major player in China’s rapidly growing natural gas market, and we look forward to a successful, long-term relationship with ENN as a customer,” said Jack Fusco, Cheniere’s President and Chief Executive.

“This SPA underscores the strength of the global LNG market, particularly in China, and highlights Cheniere’s role as a leading global supplier,’ added Fusco.

The CEO noted that the deal further advanced Cheniere’s commercial momentum in anticipation of the final investment decision expected in 2022 on expanding the Corpus Christi facility.

Wang Yusuo, Chairman of ENN Natural Gas, was embarked on the cleaner energy path with industry reforms and structural adjustment of energy consumption.

“It is expected that the two parties will seize the opportunity of this cooperation to establish a strategic relationship, to provide clients with high quality resources and services,” said Wang.

ENN, whose shares are listed in Hong Kong, said in its latest earnings that first-half revenues had increased 30 percent to the equivalent of US$6.38Bln.

ENN now has a total of 239 city-gas franchises in 20 different regions and provinces in areas such as in Beijing, Fujian, Guangdong, Shanghai and Tianjin, with a connectable population of 117 million.

Since the start of 2021, ENN has acquired more exclusive operating rights in four more city-gas projects, the Ruyang Industrial area in Henan province, Lvsigang Town in Jiangsu province, the Lantang industrial new town in Guangdong province and the industrial area of Chizhou in Anhui province.

US Freeport liquefied natural gas plant owner and Chief Executive Michael Smith said he expected to be shipping cargoes for decades from the Texas facility at Quintana Island.