Aramco plans to invest $110 billion in the development of the Jafurah gas field that is estimated to hold some 200 trillion cu ft of gas, the Saudi press Agency reported.
Jafurah is the largest unconventional gas field in Saudi Arabia and could begin producing in 2024, the agency also reported. Production is seen at 2.2 billion cu ft daily, a rate to be reached by 2036.
Besides gas, Jafurah could also produce around 425 million cu ft of ethane, and 550,000 bpd of gas liquids and oil condensates.
Developing its natural gas reserves is a priority for the Kingdom as it seeks to reduce its reliance on crude oil for local power generation and switch to gas so there is more oil for exports. In the future, Saudi Arabia plans to generate 70 percent of its electricity from natural gas and the remainder from renewables.
Yet the Kingdom also plans to become a natural gas exporter, and soon, according to its new energy minister, Abdulaziz bin Salman.
"Soon you will hear about the ability of the kingdom to be a gas exporter," bin Salman said earlier this month without offering any further details.
At the same time, Saudi Arabia is also seeking international expansion in natural gas. Last year the company’s senior management noted this ambition in the first conference call of the company ahead of its initial public offering, which took place in December, noting an agreement signed with Sempra Energy for the purchase of 25 percent in the Port Arthur LNG project.
Yet natural gas is also key for the petrochemicals industry and Aramco has big plans for petrochemicals as well. The Saudi company is committing billions of dollars to new petrochemical projects, including a US$44-billion refinery and petrochemical complex in India and a US$7-billion investment in another complex in Malaysia, and is in negotiations with companies for more partnerships in this segment.
By Irina Slav for Oilprice.com
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In 2019 Saudi Arabia’s production of an estimated 115.0 billion cubic metres (bcm) of gas was used domestically for electricity generation, water desalination plants and the petrochemical industry.
The development of the Jafurah gasfield with an estimated 200 trillion cubic feet (tcf) of gas will make Saudi Arabia self-sufficient in gas needs and will enable it to replace oil in electricity generation and water desalination plants as well as giving a huge push to the country’s petrochemical industry.
And with Saudi Arabia accelerating its energy transition, the demand for natural gas for electricity generation is accelerating fast to bridge the gap until solar and nuclear electricity can satisfy its electricity needs in the future thus adding more longevity to its oil wealth.
Still, Qatari LNG is destined to play a significant role in the diversification of both the Saudi and UAE economies once the conflict between them is settled.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London