Saudi Aramco has entered into a long-term supply agreement with Commonwealth LNG, according to Reuters sources. The deal involves annual shipments of 1 million tons of liquefied natural gas.
The LNG will come from a facility in Cameron, Louisiana, which has a nameplate annual capacity of 9.5 million tons. The plant was originally scheduled to begin operations by 2027, but the developer announced last year a delay, pushing the start date to 2031.
Commonwealth LNG cited a temporary ban on new LNG capacity imposed by the Biden administration in its final year as the reason for the delay. This ban followed a report by an environmentalist claiming LNG is more harmful than coal. The Trump administration later lifted the ban, but not in time to prevent the schedule change.
Reports of Aramco's interest in the Louisiana project, which will use gas from the Eagle Ford shale basin, first surfaced last year. Those earlier reports mentioned an initial amount of 2 million tons annually, as Aramco seeks to develop a significant presence in LNG trading, particularly in the United States.
For Commonwealth LNG, the Aramco agreement brings it closer to its contracted volume target of 8 million tons annually. This target is a condition for making a final investment decision on the project, now expected by the end of the first quarter this year. The first phase of construction is estimated to cost $11 billion and generate annual export revenues of about $3.5 billion.
Last year, Aramco stated its aim to build an LNG capacity portfolio of 20 million tons annually to secure a position in the global market for the fuel, amid bullish forecasts for global gas demand. As of August last year, Aramco had secured approximately 4.5 million tons of that capacity.