Saudi Aramco has held early talks to buy a stake in a U.S. company and has inquired about potentially acquiring assets in the two biggest U.S. oil and gas shale basins, the Permian and the Eagle Ford, The Wall Street Journal reported on Wednesday, citing people familiar with the matter.
While the Saudi state-held oil giant owns refineries throughout the world—including the biggest U.S. refinery, the 600,000-bpd Port Arthur via its now 100-percent held unit Motiva—Aramco is not producing oil or gas outside of Saudi Arabia.
A possible deal to buy oil and gas assets in the U.S. would be a huge moment for Saudi Arabia, and for the U.S.
According to WSJ’s sources, Aramco has held initial talks to either buy a stake in Houston-based liquefied natural gas (LNG) developer Tellurian, or to buy some of its gas in the future.
The Saudis have also talked to other U.S. companies about potential natural gas export deals. In addition, Aramco has inquired about possibly buying producing assets in the Permian and the Eagle Ford, the WSJ said.
Last week, Saudi Aramco said it would spend US$40 billion annually through 2027, a 25-percent increase on its previous ten-year investment program that was made public last year. The total figure for the ten-year period stands at US$414 billion. Of this, US$134 billion will go towards drilling new wells and servicing them, while US$78 billion will be used to maintain production potential. Over US$120 billion will go into offshore field development and a lot will be spent on downstream projects as the Kingdom eagerly diversifies into refining and petrochemicals—not just at home but abroad as well—to reduce its reliance on crude oil exports.
Aramco’s new spending plans come as the oil market and investors are waiting for more details on the much-hyped sale of 5 percent of the Saudi oil firm via an initial public offering that is expected to be the world’s biggest IPO ever.
Tellurian, on the other hand, earlier this week proposed to develop the Tellurian Pipeline Network, which would include the previously announced Driftwood Pipeline (DWPL) and two additional pipelines that would expand supply alternatives for the growing natural gas demand in Southwest Louisiana. DWPL is anticipated to be in service in the middle of 2021 and the additional two pipelines are expected to be in service by the end of 2022, subject to commercialization, Tellurian said.
By Tsvetana Paraskova for Oilprice.com
rockman on Fri, 22nd Dec 2017 6:34 am
“A possible deal to buy oil and gas assets in the U.S. would be a huge moment for Saudi Arabia, and for the U.S.” Not really: just one more oil/NG company joining the hundreds already here. Business stays the same.
twocats on Fri, 22nd Dec 2017 8:19 am
I find this very weird. We’ve been reading article after article for years that Saudi Arabia is “AT WAR” with US Shale. And now US Shale is going to be purchased by Saudi Arabia? That’s a strange war. It’s like a mercenary army that’s switching sides. What’s to keep Saudi Arabia from focusing solely on gas production (for export to their own domestic electrical production) and nixing oil development (to boost sales of their oil). Sounds like a global oil coup. They aren’t just “one of hundreds”, because they’ve already shown they are willing to cut production by 100s of 1,000s of barrels, something no shale company has ever shown the capacity to do.
Anonymous on Fri, 22nd Dec 2017 10:53 am
Twocats:
1. Aramco is not going to buy enough shale to make a difference in terms of turning it off. This would be more of a learning investment or for political purposes. Rock, is right here.
2. In terms of learning, Saudis have their own shale, have looked to hire experienced shale people into Arabia, etc. But you can see that pretty nowhere other than Canada has the sort of shale businesses that the US does. They may think they can learn from having an entire company in portfolio. And if you are going to do that, the US is the place to go for that.
3. The TELL investment could be very interesting. Not for the “oh my God the Saudis are coming” aspect. They have been fine in Motiva! But because it sure as heck would make people take TELL seriously. They would be the first of the “second generation” of US LNG plants. And for TELL having a strong investor like Saudis would be huge to move them from a paper project to reality.
Apneaman on Fri, 22nd Dec 2017 10:59 am
Shell and Eni will face the “biggest corporate bribery trial” over a $1.1 billion Nigerian oil deal
“A five-year old complaint filed by an anti-corruption coalition over a billion-dollar oil deal in Nigeria has resulted in the “biggest corporate bribery trial” of all time.
Yesterday (Dec. 20), an Italian judge ordered oil giants Royal Dutch Shell and Eni, and some current and former employees, to stand trial on charges of “aggravated international corruption” over their role in the $1.1 billion purchase of OPL 245, a lucrative Nigerian oilfield with an estimated nine billion barrels of probable reserves. The trial will start in Milan on March 5 2018.”
https://qz.com/1162711/nigeria-corruption-shell-and-eni-to-stand-trial-over-1-1-billion-opl245-bribery-oil-deal/