State oil company Saudi Aramco has placed new developments located off both coasts of the kingdom at the heart of its strategy to meet Riyadh’s target to increase production capacity
Saudi Arabia is the world’s biggest oil exporter and is home to the largest reserves of oil and the fourth-largest reserves of gas.
Hydrocarbons account for 51 per cent of the kingdom’s gross domestic product and all its spending commitments rely heavily on oil and gas production. As well as exporting oil, much of the country’s industry relies upon feedstock provided by Saudi Aramco. This includes gas and refined oil products such as naphtha.
The majority of Saudi Arabia’s increased production capacity will be provided by offshore oil and gas fields
With oil prices averaging more than $100 a barrel, Saudi Arabia is keen to maintain its crude output as well as increase capacity to more than 13 million barrels a day (b/d) by 2014. It also plans to increase gas production to 13 billion cubic feet a day (cf/d) by 2020. The majority of this additional output will be provided by offshore oil and gas fields.
State-owned Saudi Aramco is responsible for all of the kingdom’s oil and gas operations, both onshore and offshore. Aramco is regarded as the world’s largest oil company and has almost 260 billion barrels of oil and 282.6 trillion cubic feet of gas under its stewardship.
Aramco is headquartered at Dhahran in the Eastern province of Saudi Arabia, with offices throughout the kingdom as well as in North America, Europe and Asia.
The oil firm commenced operations in 1933 and was a subsidiary of what today is the US’ supermajor Chevron. It became fully state-owned in 1980.
The kingdom’s offshore industry is well established on the Gulf coast and Aramco operates several oil and gas fields that contain massive reserves of hydrocarbons.
About 265 kilometres off the coast of the Eastern Province lies the world’s largest offshore oil field, Safaniya. Aramco has produced oil from the Safaniya field since 1957 and has estimated reserves of 20-30 billion barrels and produces 1.2 million b/d. Other large existing offshore oil fields include Abu Safah, Zuluf, Marjan, and Berri.
The kingdom now has one non-associated gas field in operation in the Gulf. The Karan field holds 9 trillion cubic feet of gas and when fully commissioned in April 2013 will produce 1.8 billion cf/d.
Aramco has ambitious plans for its offshore developments on both coasts of the kingdom. On the Gulf coast, there are two major projects with a total value of $13.6bn.
The $9bn Manifa field development is being fast-tracked and production will add 900,000 b/d to the kingdom’s oil capacity when it is completed, as well as 120 million cf/d of gas. The field is expected to come onstream in 2014.
The Wasit Gas Development programme is based around two non-associated gas fields, Arabiyah and Hasbah. When completed in 2015-16, the developments are set to produce 2.5 billion cf/d of gas.
The Red Sea is estimated to hold about 100 billion barrels of oil and significant reserves of gas. Seismic evaluations are still taking place, but if Aramco decides to start developing the area, the first phase will cost at least $25bn.
Aramco faces several challenges relating to its offshore operations, from the type of hydrocarbons contained in the fields to the geographical conditions of the drilling areas.
On the Gulf coast, the major challenge for Aramco is the sulphur content of the hydrocarbons. Both the oil and gas in the majority of the new field developments are rich in sulphur and as such need to be treated extensively before they can be used. This process adds additional cost to the operations.
On the Red Sea coast, the major challenge will be the depth of the waters in which exploration and production will occur. The Gulf is shallow, but depths of 1km or more are common off the west coast of the kingdom. These waters are more similar to the North Sea in Europe and the Gulf of Mexico in the US.
- Minister of Petroleum and Mineral Resources: Ali al-Naimi
- Main operating company: Saudi Aramco
- Saudi Aramco chief executive officer: Khalid al-Falih
- Main areas of offshore activity: Gulf, Red Sea (under seismic evaluation)
- Value of projects planned or under way: $13.6bn