Saudi Aramco, the biggest oil company in the world, is set to acquire a stake in a liquefied natural gas (LNG) company, marking its first international investment in LNG.

The state energy major on Thursday said it has signed definitive agreements to acquire a strategic minority stake in MidOcean Energy for $500 million.

MidOcean Energy is an LNG company formed and managed by EIG Global Energy Partners, a leading institutional investor in the global energy and infrastructure sectors, the companies said in a joint statement.

According to the International Energy Agency, the value of global LNG trade doubled last year to more than $450 billion. Demand for the fuel soared due to the disruptions to supply caused by the Russian invasion of Ukraine.

While Saudi Aramco has extensive gas reserves, they have mainly been tapped to meet domestic demand. The oil and chemicals company has been mulling an entry into the LNG segment for a while now, and  earlier this year Aramco indicated that it is interested in participating in an overseas LNG liquefaction project.

In its 2022 FY financial statement, Aramco had earmarked a capital expenditure spend of $45 billion-$55 billion for this year as it ramps up investment in oil, gas and chemicals production.

MidOcean Energy is currently in the process of acquiring interests in four Australian LNG projects, with a growth strategy to create a diversified global LNG business, according to the statement.

Previously Aramco and EIG were part of a consortium that acquired a 49% stake in Aramco Oil Pipelines Company, a subsidiary of Aramco, in 2021.

Amin H. Nasser, Aramco President & CEO, said: “We anticipate strong demand-led growth for LNG as the world continues its energy transition journey, with gas being a vital fuel and feedstock in various industries. We believe that gas will be important in meeting the world’s rising need for secure, accessible and more sustainable energy.”

Completion of the transaction is subject to closing conditions which include regulatory approvals. Aramco also has the option to increase its shareholding and associated rights in MidOcean Energy in the future.

(Writing by Brinda Darasha; editing by Seban Scaria)