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Aramco has been trying to set up LNG operations for a few years after hiring traders in Singapore. Image Credit: Shutterstock

Saudi Aramco agreed to buy a stake in MidOcean Energy for $500 million, its first investment in liquefied natural gas as the company seeks to diversify beyond its core oil business.

Aramco is bringing its financial heft to LNG at a time when global demand for the fuel has surged, particularly in Europe which is replacing reduced pipeline supplies from Russia. The deal underscores an ambitious push to buy stakes in companies globally alongside efforts to branch out from oil under Crown Prince Mohammed bin Salman’s Vision 2030 development plan.

MidOcean Energy is in the process of acquiring interests in four Australian LNG projects, Aramco said in a statement. The company is managed by investor EIG Global Energy Partners, which was part of a consortium that acquired a 49 per cent stake in Aramco Oil Pipelines Co. in 2021.

Aramco has been trying to set up LNG operations for a few years after hiring traders in Singapore. It had also negotiated with Russia’s Novatek PJSC as a potential partner for one of its liquefaction projects five years ago.

It has been trying to catch up with others in the Middle East, such as neighbouring Qatar, a much smaller state which has outsized global influence in part thanks to its position as one of the world’s top LNG exporters. Profits from trading the liquefied fuel have surged globally in the past year following price increases and soaring European demand, luring new entrants.

“This is an important step in Aramco’s strategy to become a leading global LNG player,” Nasir K. Al Naimi, upstream president, said in the statement. “We see significant opportunities in this market, which is positioned for structural, long-term growth.”

MidOcean Energy last year said it would buy Tokyo Gas Co.’s investments in four LNG export plants in Australia. MidOcean is also part of a Brookfield Asset Management Inc. consortium to buy Australian utility Origin Energy Ltd.

Aramco has been stepping into other energy businesses. While crude oil production remains its main operation, it has invested in refineries and petrochemical projects in China and in fuel retailing in South America. Saudi Arabia is also considering building nuclear power projects.