U.S. oil, gas and LNG: Middle East and Asian firms ramp up investment

Oil and gas firms from Asia and the Middle East are ramping up investments in the U.S. upstream and midstream sectors as part of strategies to focus on building global value chains, particularly in LNG.

The last two years has seen eight such investment deals — four by companies based in the Middle East and four by companies based in Japan — according to Evaluate Energy M&A data.

Three of the deals involved Saudi Aramco, which acquired oil and product commodity trading house Motiva Trading, grew its stake in the Port Neches link oil pipeline, and acquired a minority stake in LNG midstream player MidOcean Energy.

Aramco already operates the Port Arthur refinery in Texas, which is connected to oil terminals by the Port Neches pipeline. The company has been investing in U.S. oil assets since 2017 as it looks to diversify. Recently it has also been expanding its LNG operations — as demonstrated by the stake in MidOcean.

Last month, Aramco also signed a non-binding deal with U.S. LNG developer NextDecade to purchase 1.2 million tonnes per annum (mtpa) of LNG from the yet-to-be-constructed Rio Grande LNG facility. Speaking on the company’s most recent results statement, Aramco’s CFO Ziad Al-Murshed said it was particularly interested in LNG off-take and trading, “as that has the opportunity of creating considerable value for us.”

Overseas interests

Aramco is not the only firm looking to invest in U.S. assets. In May, Abu Dhabi state owned oil company ADNOC acquired an 11.2% stake in the Rio Grande LNG project, as it pursued a similar strategy on LNG.

The acquisition is ADNOC’s first strategic investment in the U.S. as it continues to pursue an international growth strategy and expand its LNG portfolio.

ADNOC Gas, the integrated gas processing unit of ADNOC, plans to invest over US$13bn in domestic and international growth opportunities over the next five years. ADNOC has been building up its trading operations, and earlier this year acquired Galp Energia’s 10% stake in the Area 4 concession of the Rovuma basin in Mozambique, entitling it to a share of LNG production from the region.

Meanwhile, Japanese trading firm Mitsui & Co., Ltd. — already a partner in Sempra Energy’s Cameron LNG export plant in Louisiana — has been acquiring U.S. unconventional gas assets as it looks to grow its LNG value further into the upstream.

In 2023, Mitsui acquired a 92% interest in an asset from Silver Hill Energy Partners, and last month the firm completed the acquisition of gas assets in Texas from U.S. E&P companies Sabana LLC and Vanna LLC.

Mitsui will develop and operate the Texas asset through its U.S.-based subsidiary, aiming to reach full production after 2026. “In addition to proactively pursuing upstream development projects, we will strengthen the natural gas value chain,” the firm said in a statement.

Japanese utility Tokyo Gas has also been expanding its upstream business in the U.S. through its subsidiary Tokyo Gas Natural Resources. In its most recent acquisition, completed at the end of last year, the firm acquired all the shares of Haynesville shale-focused private company Rockcliff Energy for US$2.7 billion, quadrupling its gas production footprint in the country to 1.3 bcf/d.

“With demand for gas expected to increase in the U.S. due to the construction of new LNG export terminals, Tokyo Gas Group’s medium term management plan…states that Tokyo Gas will expand its shale gas business,” the firm said in a statement announcing the deal.

Tokyo Gas does not have any stakes in U.S. LNG projects, although it does have a 1.4 mtpa off-take agreement from the Cove Point terminal on the east coast. The advent of new tolling deal structures means that the firm will likely be able to pay projects to liquefy the gas it produces on a rolling basis or sell the gas to other off takers.

Earlier this year, Tokyo Gas sold minority interests in four LNG projects off the coast of Australia to MidOcean Energy, “as a result of reviewing the asset portfolio to allocate resources to growth areas.”

Tokyo Gas is also working with compatriots Osaka Gas, Toho Gas and Mitsubishi to produce e-methane in Texas, liquefy it at the Cameron LNG export plant, and transport it to Japan.