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Oil giant Saudi Aramco in talks with Commonwealth LNG for offtake agreement, sources say

LONDON/HOUSTON: Oil giant Saudi Aramco is in talks with Commonwealth LNG to buy liquefied natural gas from the U.S. company's proposed facility in Cameron, Louisiana, as it seeks to strengthen its position in the market for the superchilled fuel, four people told Reuters on Wednesday.

The talks are for 2 million tons per annum (mtpa), two of the people said.

Aramco and Commonwealth LNG did not immediately respond to Reuters requests for comment.

If a deal is struck, it will bring Commonwealth LNG closer to the 8 mtpa it plans to sell out of the plant's capacity of 9.5 mtpa. So far the company has 4 mtpa in signed sales and purchase agreements, and one non-binding heads of agreement deal for 1 mtpa.

Commonwealth LNG has been attempting to build the United States' first integrated LNG export facility that will see its major shareholder Kimmeridge selling gas from its Eagle Ford shale production to the plant.

Commonwealth LNG has said it plans to get to a positive financial decision on construction of the Cameron plant by the end of the year. It could contribute to the U.S. remaining the world's largest exporter of LNG.

Aramco, meanwhile, is looking to expand its fast-growing portfolio of LNG supply, especially in the United States, where LNG capacity is set to almost double over the next four years.

It has already signed deals with other U.S. players, including NextDecade's Rio Grande LNG.

Two sources said Aramco is also looking at other U.S. LNG export projects including Delfin LNG, which wants to build a 13.2 mtpa floating LNG plant in the Gulf of Mexico, and Energy Transfer's proposed 16.5 mtpa Lake Charles facility.