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Building up reserves
The project is part of an ambitious gas exploration programme which is aimed to increase gas reserves by more than 20 per cent in the next five years.
Work involves state-owned Saudi Aramco drilling more than 300 development wells including 67 exploration wells in present areas of production alone by 2011.
Since its accelerated gas exploration programme began there has been considerable progress. In the last ten years the Kingdom has added 48 trillion cubic feet to its gas reserves.
Apart from Karan, Saudi Aramco is also looking at other potentially huge gas projects and is currently assessing exploration programmes offshore in the Red Sea as well as in the Nafud northern desert and in the western region along the Red Sea coast. Saudi gas reserves are presently estimated at 242 trillion cubic feet, the world's fourth largest.
Urgent need
The need to find even more gas is urgent since the Kingdom is striving to meet rapidly increasing domestic demand for gas supplies for power generation, desalination and provide for industrial development particularly petrochemical production.
Availability of cheap and plentiful supplies of gas is seen as one of the Kingdom's most important comparative advantages in the global economy and a key incentive for foreign investors.
Gas is powering Saudi Arabia's industrial development and providing the feedstock for petrochemical products and other projects designed to create tens of thousands of new job opportunities. As a result, gas demand in the Kingdom is expected to increase from 5 billion cubic feet a day to 14.5 billion c/f a day by 2030.
Saudi officials also hope that gas found in new areas and not linked to petroleum will change the balance of gas reserves. These are mostly held mainly in association with crude oil production and presently account for 57 per cent of the total.
This balance could change dramatically in favour of non-associated gas if exploration is successful in the remote southeast Rub al-Khali (Empty Quarter). The Anglo-Dutch Shell Group, France's Total, Italy's Eni, Spain's Repsol , China's Sinopec and Russia's Lukoil are engaged in ongoing programmes in the Rub al-Khali.
Lukoil has already recorded some promising finds of gas in its concession. However, these are still being appraised and it may take time for exploration efforts to establish the true potential of the area.
While much of the Kingdom's future gas potential hinges on the prospects of discoveries by foreign companies in the Rub al Khali basin there are also a growing number of gas prospects, exemplified by the Karan venture, now emerging in other parts of the Kingdom.
