Saudi Aramco has entered into a 20-year agreement with U.S.-based Sempra Energy to purchase LNG from its subsidiary Sempra LNG, the two companies said on May 22.

“If converted to a sales and purchase agreement (SPA), this will be one of the largest LNG deals ever signed and the largest deal signed since 2013,” said Giles Farrer, research director for Wood Mackenzie.

“This is a signal of Aramco’s intent to become a global gas player and develop a broad LNG portfolio,” he said. “As the energy transition intensifies, we are seeing oil-focused NOCs following major international oil companies by diversifying their exposure away from oil and into gas and LNG.”

Aramco has been developing its own gas resources and eyeing gas assets in the United States, Russia, Australia and Africa. The two companies are also finalizing a 25% equity investment in the phase 1 of Port Arthur LNG, they said in a joint statement.

The sale-and-purchase agreement is for 5 million tonnes per annum (mtpa) of LNG from phase 1 of the Port Arthur LNG export project under development, the firms said.

“It’s unclear what the final destination of Saudi Aramco’s LNG will be,” Farrer said. “There continues to be a long-term expectation that, in time, Saudi Arabia will import LNG to be used for power generation. However, we expect that Saudi Aramco will use this volume to establish a global portfolio as it seeks to become a global gas player.”

The proposed Port Arthur LNG Phase 1 project is expected to include two liquefaction trains, up to three LNG storage tanks and associated facilities which should enable the export of about 11 mtpa on a long-term basis.

“Port Arthur LNG could be one of the largest LNG export projects in North America, with potential expansion capabilities of up to eight liquefaction trains or approximately 45 mtpa of capacity,” the statement said.

Assuming the deal is completed, Port Arthur LNG could proceed to a final investment decision by the end of the year, Farrer said.

Aramco’s trading arm sold its first LNG cargo on the spot market in late March to an Indian buyer, according to sources familiar with the matter.

Aramco plans to boost its gas production to 23 billion standard cubic feet (scf) a day from about 14 billion scf now. 

Reuters contributed to this story.