ExxonMobil-QatarEnergy JV Starts LNG Output at Texas Facility

Exxon Mobil Corporation XOM and QatarEnergy’s joint venture, Golden Pass LNG, have begun production of liquefied natural gas at the new Sabine Pass facility in Texas. Golden Pass LNG’s CEO highlighted that the start of production at the new facility marks the completion of construction and commissioning efforts toward the startup of Train 1. The first production unit, Train 1, will add 6 million metric tons per annum (MTPA) of LNG capacity.

The new facility is slated to export its first LNG cargo in the second quarter of 2026. The Golden Pass LNG project is expected to have a total LNG capacity of 18 MTPA upon becoming fully operational. The ongoing conflict in the Middle East has affected QatarLNG’s gas output, shrinking global supplies and increasing the cost of natural gas in Europe and Asia. Golden Pass LNG is expected to play a crucial role in global energy security and reinforce the United States’ position as a reliable supplier of LNG worldwide.

QatarEnergy holds a 70% interest in the LNG export project, while XOM holds the remaining 30%. Per the equity holdings of both companies, QatarEnergy will receive slightly more than 4 MTPA of LNG from this facility, while ExxonMobil will receive a little under 2 MTPA. The Golden Pass project has previously faced several setbacks and delays. The construction of this $10 billion project began in 2019, and since then, the company has faced several challenges leading to cost overruns, including the bankruptcy of its lead contractor.

The company has stated that the startup of LNG production has paved the way for the first LNG cargo to be exported from the Texas facility this year. It is confident that, upon becoming fully operational, the project will be able to achieve its commercial and strategic objectives. The startup of Golden Pass LNG is highly significant, given the supply shortages in global markets stemming from the ongoing U.S.-Iran conflict in the Middle East. Qatar is one of the largest suppliers of LNG globally, and Iranian attacks have damaged key energy infrastructure in the country, wiping out approximately 17% of LNG export capacity. These developments have affected several Asian economies as gas prices have risen significantly, pushing many countries to reduce energy exports and increase coal consumption to tackle tightening supplies.

XOM’s Zacks Rank and Key Picks

XOM currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Archrock Inc. AROC, Equinor ASA EQNR and Subsea7 S.A. SUBCY. While Archrock and Equinor sport a Zacks Rank #1 (Strong Buy) each, Subsea7 carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues. With natural gas playing an increasingly important role in the energy transition journey, AROC is expected to witness sustained demand for its services.

Equinor ASA is one of the leading integrated energy companies globally and a major supplier of natural gas in Europe. The recent conflict between the United States and Iran has resulted in a spike in gas prices and disrupted LNG supply, following damage to critical infrastructure in Qatar, tightening global LNG supply. This is expected to boost demand for Equinor’s gas exports to Europe, positioning the company to benefit from heightened prices. The company’s expansion in the renewable energy space positions it for long-term growth as more countries transition toward cleaner energy solutions to meet their climate goals.

Subsea7 helps build underwater oil and gas fields. It is a leading player in the global offshore energy industry, providing engineering, construction and related services at offshore oil and gas fields. The long-term outlook for energy demand remains positive, and Subsea7’s focus on cost-efficient deepwater projects strengthens the position of its subsea business.

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This article originally published on Zacks Investment Research (zacks.com).

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