Saudi Arabia has set its sights on becoming a major gas exporter by 2030, a key component of its “Vision 2030” plan.
To achieve this, Saudi Aramco recently unveiled over $25 billion in contracts to expand its gas sector. However, questions remain about whether the Kingdom’s projected gas output can meet its own growing energy needs, let alone fuel global ambitions.
Saudi Arabia’s Gas Production: Limited Global Impact
Despite being the world’s third-largest crude oil producer, Saudi Arabia’s gas production has historically struggled to make a significant mark on the international market. Its current annual output of around 4.2 trillion cubic feet (Tcf), while ranking it ninth globally, primarily serves domestic consumption.
While non-associated gas production has doubled since 2012, it still accounts for only half of the Kingdom’s total output.
Major Investments in Gas Expansion Projects
Recent announcements from Saudi Aramco signal a shift in this dynamic. The company has committed US$8.8 billion to expand the Kingdom’s gas network, including a third phase development of its Master Gas System (MGS).
This investment will add 4,000 kilometers of pipelines and 17 new gas compression trains, significantly boosting capacity and connecting more cities to the network.
Unconventional Gas Field Expansion: Jafurah’s Potential
An additional $12.4 billion will be invested in the second phase of the Jafurah unconventional gas field expansion. This vast eastern Saudi field, potentially the largest shale gas development outside the U.S., holds an estimated 229 Tcf of gas reserves.
The investment will focus on gas compression facilities, pipelines, and expanding the Jafurah Gas Plant and the new Riyas Natural Gas Liquids (NGL) fractionation facilities.
Can Jafurah Meet Domestic and Export Demand?
The ambitious goal is for Jafurah to reach 2 billion cubic feet per day (bcf/d) of sales gas production by 2030. However, independent estimates suggest the Kingdom will need 23-25 bcf/d within 15 years to meet its own power and industrial needs.
This raises questions about the feasibility of both meeting domestic demand and achieving substantial gas exports.
Challenges and Opportunities in Gas Production
While Saudi Arabia’s gas production faces challenges, it also presents opportunities. The Kingdom is increasingly aware of the importance of gas, especially liquefied natural gas (LNG), as a crucial energy source in a volatile global landscape.
LNG offers flexibility and rapid deployment compared to pipeline-based gas or oil.
U.S. Leadership in LNG and Potential for Collaboration
The U.S. has become the world’s leading LNG exporter, providing crucial supplies to Europe since Russia’s invasion of Ukraine.
This success highlights a potential area for collaboration between the U.S. and Saudi Arabia, with the recent 20-year LNG deal between NextDecade Corporation and Saudi Aramco signaling a possible turning point in their relationship.