Aramco-Backed MidOcean Bids $7B for Canadian LNG Stake

Saudi Aramco’s MidOcean unit advances toward major North American LNG expansion through Petronas stake acquisition, bolstering global export capabilities

Key Takeaways

• $6-7 billion LNG deal in advanced talks as Saudi Aramco-backed MidOcean emerges as preferred bidder for significant minority stake in Petronas’s Canadian gas and LNG operations
• LNG Canada terminal access secured through Petronas’s 25% stake in the West Coast export project scheduled to begin operations in 2026
• Premium valuation reflects LNG boom with potential acquisition price significantly exceeding Petronas’s original $5.3 billion investment in 2012

Introduction

Saudi Aramco moves closer to securing a foothold in North America’s LNG export market through its investment vehicle MidOcean Energy. The company has been selected as the preferred bidder for a substantial minority stake in Petronas’s Canadian gas and LNG business, according to Bloomberg reports.

The transaction represents one of the largest LNG deals this year, potentially valuing the entire Canadian unit between $6 billion and $7 billion. This acquisition would provide Aramco indirect access to critical North American LNG infrastructure through MidOcean’s global consolidation strategy.

Key Developments

Petronas initiated a strategic review of its Canadian operations in June, seeking to monetize non-core assets while maintaining strategic LNG interests. The Malaysian state energy firm acquired these assets for $5.3 billion in 2012 under the Progress Energy Resources Corp. banner.

MidOcean Energy, established by private equity firm EIG Global Energy Partners and led by former Shell executive De La Rey Venter, became integral to Aramco’s LNG strategy following a 2023 equity investment. The company has systematically acquired stakes in liquefaction projects across Australia, Peru, and preliminary agreements with Energy Transfer’s Lake Charles facility.

The Canadian assets include substantial upstream operations in British Columbia spanning 800,000 acres with 53 trillion cubic feet of reserves. Petronas also holds a 25% stake in the LNG Canada terminal, a key West Coast export project under construction with operations expected to commence in 2026.

Market Impact

The potential acquisition price represents a significant premium over Petronas’s original investment, reflecting the increased value of LNG-linked shale gas assets amid global demand growth. The valuation of $12,000-$14,000 per barrel of oil equivalent aligns with recent North American shale transactions directly tied to LNG exports.

Analysts view this deal as a potential catalyst for re-rating North American shale gas assets, particularly those with direct LNG export linkages. The transaction signals confidence in long-term LNG export profitability, especially targeting Asian markets where LNG prices command 50-70% premiums over U.S. benchmarks.

Strategic Insights

The acquisition aligns with Aramco’s broader strategy to diversify beyond traditional oil operations toward gas and LNG as core growth engines. MidOcean’s approach integrates upstream gas production with downstream LNG export terminals to maximize value capture and supply security for Asian buyers.

Petronas’s divestment strategy focuses on shifting capital toward decarbonization and local priorities while retaining strategic LNG interests. The company seeks to capitalize on the booming LNG export market, particularly the premium pricing available in Asian markets.

The deal reflects increasing Gulf interest in exploration beyond the Middle East, driven by rising LNG demand in China, South Korea, and India. This strategic move mirrors the broader trend of integrating LNG supply chains and escalating involvement of private equity and sovereign wealth in global LNG infrastructure.

Expert Opinions and Data

Industry sources indicate that while other buyers remain interested in the assets, MidOcean maintains its position as the leading contender. The transaction requires regulatory and corporate approvals, with finalization potentially occurring later this summer.

The North Montney assets’ valuation methodology reflects current market conditions where LNG-linked shale gas commands premium pricing. The deal structure positions MidOcean as a global LNG consolidator, building a diversified asset base across high-potential projects worldwide.

Representatives for EIG, MidOcean, Petronas, and Aramco declined to comment on the ongoing negotiations. However, sources close to the discussions confirm that deliberations continue to progress despite the complexity of the transaction.

Conclusion

MidOcean’s potential acquisition of Petronas’s Canadian LNG assets establishes new benchmarks for the industry, potentially influencing future transactions and investment flows in North American energy markets. The backing by Aramco and EIG underscores the shift in the global energy landscape, with traditional oil giants pivoting toward gas and LNG amid the energy transition.

The transaction represents a significant milestone in the consolidation of global LNG supply chains, positioning the combined entity to capture value across the entire production and export process. This deal demonstrates the strategic importance of securing LNG export capacity in premium markets while maintaining operational flexibility across multiple jurisdictions.