Saudi Aramco’s drive to increase gas output and become an exporter will spur $150bn worth of investments over the next decade, according to the state energy group’s chief executive.
Outlining plans to increase Aramco’s gas output by almost 65 per cent from present levels, Amin Nasser said plans to create an integrated international gas business would “attract investments of about $150bn over the next decade, with daily production reaching 23bn standard cubic feet a day from the current 14bn”.
“[Shale gas] production will play an important role in the further growth of the kingdom’s chemicals sector,” he added.
Saudi Arabia, the world’s largest oil exporter, is trying to expand its economy beyond crude in preparation for when demand for its vast resources stagnates in the decades to come. It is boosting gas exploration and production of both conventional resources and those from shale fields, to feed into power generation as well as to fuel the petrochemicals sector.
While the kingdom has vast shale gas resources — such as those in northwestern Saudi Arabia, south of Ghawar and the Jafurah basin — analysts have historically deemed them expensive to extract because of their depth, remoteness and lack of water and infrastructure.
Robin Mills, Middle East energy expert and chief executive of Qamar Energy, said the notion of Saudi Arabia becoming a major natural gas exporter was still a distant prospect.
“They would first need to generate a massive amount of extra gas to replace oil in power generation. Then they would need to keep up with domestic demand, which is growing. Whatever is left could be exported, but this is hard to imagine,” he added.
But he highlighted that Saudi Aramco was expanding its gas business abroad by securing deals with foreign energy players. “They’ve realised that to be a serious energy company, you need to be in gas.”
Khalid al-Falih, Saudi energy minister, said the kingdom aimed to acquire a 30 per cent stake in Russian gas producer Novatek’s $21bn liquefied natural gas project in the Arctic.
Saudi Aramco has also signed an early stage deal with Shell to jointly pursue global gas business opportunities, including upstream development, liquefaction projects and other aspects of the gas value chain.
International energy majors, from Royal Dutch Shell to France’s Total, have shifted their businesses towards gas to mirror an expected global transition towards cleaner fuels.
Source: Financial Times
