Shipowners throw hats in ring for Saudi Arabia’s first LNG carriers

Middle East energy giant advances further into gas with plans for huge shale development to rival US production

Saudi Arabian interests pursuing the country’s first LNG carriers are sifting through initial bids from shipowners on up to 12 vessels.

TradeWinds understands that a pre-qualification exercise being handled by shipbrokers and consultants Poten & Partners — on behalf of domestic energy giant Saudi Aramco and its shipping arm, Bahri — has closed.

One source following the process said the net had been “cast quite widely” among LNG shipowners, large and small.

Under the original timetable, selected companies had been due to receive a full request for proposals this month, with plans to compile a shortlist of owners by June.

Lack of movement

Shipbuilders said they have yet to see any sign this business is moving ahead. They added that as the ships are not required until 2025 onwards, the process may take time to advance.

In October, TradeWinds revealed that via Bahri, Saudi Aramco had asked shipyards for initial offers on up to 12 LNG carriers of about 174,000 cbm.

The vessels, which would be the first LNG ships for Saudi Arabia, are part of the country’s planned move into the LNG sector.

Saudi Aramco, which listed on its local Tadawul exchange in December and last month opened a trading office in London, is diversifying from oil into gas and renewables.

On LNG, the company has signed a heads of agreement with Sempra Energy to buy 5 million tonnes per annum and take a 25% equity stake in the US liquefaction developer’s yet-to-be-sanctioned, 11-mtpa Port Arthur LNG project on the US Gulf coast.

The LNG carriers would be used to lift these volumes.

Delay denied

In a results briefing last week, Sempra fended off analysts who asked if it might push back or even cancel its plans to approve the project in the current climate of exceptionally low gas prices and LNG surplus. Such a move would throw its heads of agreement with Saudi Aramco into doubt.

Sempra chairman and chief executive Jeffrey Martin said the company remains focused on its long-term investments, adding that, by the middle of this decade, there will be a shortage in capacity to meet LNG demand, it believes.

Martin said Sempra had a team on the ground in Saudi Arabia and is working towards sanctioning the project in the third quarter.

Saudi Aramco has already sold a first traded LNG cargo to India and is in talks with Bangladesh about supplies.

But Saudi Arabia is also spreading its gas initiatives beyond LNG.

Last month, the energy giant announced it is launching what it has described as the largest shale gas development outside the US, and the end of oil use at its power plants.

The Jafurah shale gas field project could make Saudi Arabia the world’s third largest gas producer slot by 2030, behind the US and Russia.

Today's Bunker Prices: