Riyadh turns its attention to gas

08 February 2011

Saudi Aramco has shifted its focus to increasing gas capacity to service growing local demand

As Saudi Aramco prepares to award the four packages on the Shaybah natural gas liquids (NGL) project, it is a good time to reflect on what the oil giant’s next step is going to be.

Since the daily output of 12.5 million barrels a day (b/d) of crude oil was reached, Aramco has turned its attention to increasing domestic gas output. Multibillion dollar projects such as the one at Shaybah, as well as the Wasit gas development programme are being fast-tracked to ensure gas is available to service rising domestic demand.

While Saudi Arabia has the fifth largest gas reserves in the world, it is still relatively difficult for a project to secure a gas allocation in the country, especially if it does not have state-backing.

Saudi Arabia is hoping that by 2014, there will be enough gas to meet demand and any prospective factory or power plant will be able to secure an allocation. What Aramco will do after this remains to be seen. There are a number of smaller gas fields that Aramco’s exploration department has discovered, but a decision will have to be made as to their economic viability.

The answer to that lies in Saudi Arabia’s industrial diversification plans and a calculation as to how much value can be added to the gas produced. The fact is that the further downstream Saudi Arabia moves, the more value gets added to the gas. Future petrochemicals and metals plants will determine Aramco’s next step.

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