Saudi Arabia plans to double gas production
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Saudi Arabia plans to double gas production

Saudi Arabia plans to double gas production

Saudi Arabia's pivotal position as the world's leading oil producer is well known but its credentials in terms of gas resources are also impressive. The country's proven reserves of gas have doubled in 20 years to 6.7 trillion cubic metres.

    As a result, the Kingdom now has the third largest proven gas reserves in the Middle East and the fourth largest in global terms after Russia, Iran and Qatar.

    Saudi Arabia is also the largest global exporter of natural gas liquids, as well as methanol, octane enhancers and ammonia fertilisers, all of which are produced using gas. Proven Saudi reserves of gas, that is those that can with reasonable certainty be recovered from known reservoirs using existing operational methods, amount to 220 trillion-cubic feet.

    Exploration that is likely to substantially increase this share is gathering pace. At the same time current gas production is predicted to rise from around 7 billion cubic-feet-a-day to 15 billion cubic-feet-a-day by 2010.

    Domestic demand

    It is the huge domestic requirement for gas and the need to drive forward Saudi Arabia's ambitious industrial projects that is shaping plans for development including gas gathering facilities, pipelines as well as exploration ventures.

    The fact that almost 40 per cent of the country's gas is not associated with crude oil production has also focused attention on those gas resources that can be developed independently of oil production.

    Until the early 1980s, and development of the Kingdom's master gas system (MSM), the gas associated with oil production was flared. Since then gas has become a vital factor in fuelling power and desalination plants and providing feedstock for the petrochemicals industry.

    While an ambitious effort to draw international oil companies into a series of core upstream ventures associated with gas exploration and development was abandoned in 2003, a less elaborate project has taken off. This still involves major investment by foreign energy companies. However, instead of integrated packages combining upstream, midstream and downstream schemes, the attention is now solely on gas.

    FDI for gas

    An agreement with Shell and Total was reached in 2004 followed later by others with Russia's Lukoil and China's Sinopec (International Petroleum and Production Corporation) as well as Spain's Repsol YPF and Italy's ENI.

    The companies have high hopes of profitable ventures in their search for gas in the Rub al-Khali, Saudi Arabia's southern desert wilderness known as the Empty Quarter. Gas resources have already been identified at Kidan and Suhol in the region. Lukoil's VP Leonid Fedun has said his company expects a 15% per cent return on the project.

    Non-associated gas is also known to lie below other areas in the Kingdom including Ghawar, Beni, Qatif, Dammam, and Abqaiq. The central region south of Riyadh also has associated gas at Hawtah and Nuayyim.

    The Royal Dutch Shell/Total joint venture with Saudi Aramco is the largest concession awarded in the Empty Quarter. Some $2 billion is committed for gas exploration in a 200,000 square kilometre area.

    Shell VP Jeroen Van der Veer says the agreement is an important breakthrough since "it heralds the first time after the creation of Saudi Aramco that international oil companies have gained access to gas acreage in the Kingdom."
    AMEinfo Staff

    AMEinfo staff members report business news and views from across the Middle East and North Africa region, and analyse global events impacting the region today.

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