Saudi Arabia is considering resurrecting plans to build a liquefied natural gas (LNG) receiving terminal on the Red Sea coast of the kingdom in a bid to increase gas supplies to the kingdom in the short to mid-term.

The initial study explored the feasibility of building a receiving terminal on the Red Sea coast, but now the plan is starting to evolve and could include the construction of liquefaction trains in the future.

“The LNG terminal has been on the drawing board for some time now,” says an oil and gas executive based in Saudi Arabia. “Now they are looking at a short-term measure for importing gas into the kingdom and then, depending on the size of the gas reserves in the Red Sea, building export facilities that would be used to transfer the gas around the kingdom.”

The executive says that if the scheme went ahead, there has been no indication of any plans to export the gas to international consumers.

“Saudi Arabia is an enormous land mass, so building a large pipeline is prohibitively expensive,” says the source. “This offers a ‘floating pipeline’ and would work out far cheaper to execute in the long term.”  

LNG receiving terminals are becoming more common in the Middle East. The UAE has one in operation in Dubai and is building another in Fujairah. Jordan is planning one for its port in Aqaba, while Kuwait operates a floating LNG facility that has been in operation since 2010.

Saudi Aramco has ramped up its operations in the gas sector and is executing several multibillion-dollar projects aimed at increasing its output by more than 50 per cent by 2017. It has pledged to increase gas supply from 9.9 million cubic feet a day (cf/d) to 15 billion cf/d. This should be achieved by 2017.

According to the 2013 BP statistical survey gas consumption grew by 11.2 per cent in 2012.

Most of the kingdom’s current gas projects are non-associated and/or unconventional. Issues such as high sulphur content, as well as difficulties in accessing the gas located in shale or tight formations, are other concerns.