With strong government backing and billions of dollars at their disposal, Middle Eastern oil giants are aggressively expanding into the global liquefied natural gas (LNG) market, aiming to nearly double their LNG capacity within the next decade. Companies like Saudi Aramco, Abu Dhabi National Oil Co. (ADNOC) and QatarEnergy are investing heavily in LNG production and trading, driven by the growing demand for natural gas as a transition fuel and a desire to diversify their portfolios beyond crude.
“LNG seems to be still the best bet across all different hydrocarbon commodities,” Ogan Kose, managing director at business consulting firm Accenture, told Bloomberg, adding that margins from LNG investing and trading are “almost unheard of in any other hydrocarbon commodity.”
Whereas natural gas usually plays second fiddle to oil in global energy markets, LNG is seeing sustained demand and faster growth thanks to its role as a bridge fuel in the transition to renewable energy. However, many LNG projects have been hit by delays and large cost overruns, needing extra cash to get them to completion. This opens up an opportunity for cash-rich Gulf nations to flex their energy, financial, and geopolitical muscle in the space.
Further, the Middle East sees LNG as a golden opportunity to expand their commodity trading desks and close the gap with Europe’s energy trading giants Shell Plc (NYSE:SHEL) and BP Plc. (NYSE:BP). Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman are all looking to expand in LNG trading. Oil and gas trading has become a major income source for oil and gas giants, especially when commodity markets are highly volatile.
And, the deals are coming thick and fast. Four days ago, Adnoc’s investment arm XRG PJSC made an $18.7 billion offer for Australian fossil fuel producer Santos Ltd. (OTCPK:STOSF), good for a nearly 30% premium to Friday’s close, as the Middle East oil giant seeks to expand its LNG portfolio. Santos is pushing an aggressive investment plan to ramp up LNG output by 50% by the end of the decade. Whereas this strategy has frustrated investors looking for quick, near-term returns, it appears to have paid off by luring in a company like XRG searching for high-growth potential. XRG has been on a gas and chemicals buying spree as it targets an $80 billion enterprise value.
Last year, Qatar Energy kicked off production at the Golden Pass LNG project in Sabine Pass, Texas, project. The Golden Pass LNG project in Sabine Pass is a joint venture owned by QatarEnergy (70%) and ExxonMobil (NYSE:XOM), which owns a 30% stake. This more than doubled QatarEnergy’s North gas field expansion production from 77 million metric tons per annum (MMtpa) to 160 MMtpa. Golden Pass LNG is allowed to export up to 937 billion cubic feet a year of natural gas to Free Trade Agreement (FTA) and non-FTA countries on a non-additive basis over the next 25 years. In April, the JV secured regulatory approval by the Federal Energy Regulatory Commission (FERC) to commission the project.
Two years ago, Aramco entered the LNG sector after it acquired a strategic minority stake in Australia’s MidOcean Energy for $500 million. Last year, Aramco upped its MidOcean stake to 49% and also agreed to fund the company’s purchase of a 15% stake in Peru LNG from Hunt Oil Company. MidOcean Energy has adopted a growth strategy to create a diversified global LNG business, with the company in the process of acquiring interests in four Australian LNG projects.
Meanwhile, Kuwait Petroleum is in talks with Australia’s Woodside Energy Group (NYSE:WDS) to purchase a stake in its proposed LNG project in Louisiana, U.S, Bloomberg has reported. Back in April, Woodside, Australia’s top gas producer, agreed to sell a 40% stake in the 27.6M metric tons/year Louisiana LNG plant to Stonepeak for $ 5.7B Woodside bought U.S.-based Tellurian for $1.2B in 2024, looking to develop the Louisiana LNG project to meet growing demand for gas. The first phase of the massive project is expected to cost ~$16B.
That said, the LNG craze is not limited to the Middle East. Malaysia’s state-owned oil and gas company, Petroliam Nasional Bhd., and other Southeast Asian companies are all looking to expand LNG production beyond their borders. Overall, the experts say the rapid expansion of LNG markets is a good thing, with a greater pool of suppliers likely to benefit LNG buyers, boost competition, and diversify options.
By Alex Kimani – Jun 22, 2025
