Saudi Aramco, the world’s largest oil producer, has announced its first international investment in liquefied natural gas (LNG), a move that signals its ambition to diversify its energy portfolio and reduce its carbon footprint.

The state-owned company said on Thursday that it would buy a minority stake worth $500 million in MidOcean Energy, a US-based firm that manages LNG assets in Australia.

The deal marks Aramco’s entry into the global LNG market, which is expected to grow as countries seek cleaner and more secure sources of energy amid the transition to a low-carbon economy.

Aramco CEO Amin Nasser said in a statement that gas was “a vital fuel and feedstock in various industries” and that the company wanted to become “a leading global LNG player”.

He added that the investment in MidOcean Energy was part of Aramco’s strategy to “create long-term value for our shareholders and the kingdom”.

MidOcean Energy is currently acquiring interests in four Australian LNG projects, which have a combined production capacity of over 20 million tonnes per year, according to Aramco.

The projects are Pluto LNG, Wheatstone LNG, North West Shelf Project and Darwin LNG, which supply LNG to customers in Asia and Europe.

Aramco said it would work with MidOcean Energy and its partners to “maximise the value of these world-class assets” and explore further opportunities in the LNG sector.

The investment comes as Aramco faces pressure to reduce its reliance on oil revenues and meet its environmental targets.

Last year, Aramco reported a record profit of $161.1 billion, which helped Saudi Arabia achieve its first budget surplus in almost a decade.

However, the company also saw its earnings decline in the first half of 2023 due to lower oil prices and production cuts imposed by OPEC and its allies.

Aramco has pledged to achieve “operational net-zero” carbon emissions by 2050, which means it will eliminate or offset the emissions from its own operations, but not from the end-use of its products.

The company said it was investing in “a range of low-carbon solutions”, including hydrogen, carbon capture and storage, renewables and energy efficiency.