State-owned Saudi Arabian Oil Co., better known as Aramco, is moving forward with a multi-billion dollar project to boost natural gas production, and possibly fuel its export ambitions.
Aramco has awarded 16 contracts, worth a combined $12.4 billion, and initiated the second phase of its plan to tap more natural gas resources in the Jafurah gas field near Saudi Arabia’s northeast coast. It also secured 23 gas rig contracts worth $2.4 billion and two directional drilling contracts worth $612 million.
In anticipation of expanded gas supply, Aramco awarded another $8.8 billion in contracts to expand its “master gas system” used to transport the fuel across Saudi Arabia.
“These contract awards demonstrate our firm belief in the future of gas as an important energy source, as well as a vital feedstock for downstream industries,” CEO Amin Nasser said. “The scale of our ongoing investment at Jafurah and the expansion of our master gas system underscores our intention to further integrate and grow our gas business to meet anticipated rising demand.”
The Jafurah is Saudi Arabia’s largest unconventional gas field, estimated to contain around 229 Tcf of gas and 75 billion bbl of condensate.
Aramco commenced the first phase of its Jafurah development plan in 2021, with an initial startup targeted for 3Q2025. The firm expects to invest more than $100 billion during the field's lifecycle to reach a gas sales rate of 2 Bcf/d by 2030.
With the latest round of contracts, Aramco has awarded more than $25 billion in contracts for gas developments since the end of 2022.
Aramco is owned by the Saudi royal family and is one of the world’s largest integrated energy companies. In recent years, it has been working to boost natural gas output and extend its reach beyond oil into low-emissions fuels.
Domestically, the kingdom is aiming to reach an energy mix of 50% renewables and 50% natural gas by 2030. At the same time, its expectations of growing power demand from residential consumers and data services are exponentially increasing its potential natural gas consumption by the end of the decade.
Saudi Arabia’s energy ministry forecast gas demand to reach 4.4 Tcf by 2030.
For now, Aramco is focused on meeting that growing demand rather than using its domestic production to fuel LNG exports from Saudi Arabia. The country is traditionally ranked as the third highest producer of natural gas in the Middle East, behind Qatar and Iran, but lacks a liquefied natural gas export facility.
It has also prioritized developing blue hydrogen and blue ammonia, which is made with natural gas. Aramco has already been sending cargoes of blue ammonia to Japan under a partnership with Saudi Basic Industries Corp. and the Japanese Ministry of Economy, Trade and Industry to study a value chain for power generation.
But, outside of the kingdom, Aramco has been making big moves to increase its international portfolio and compete with its LNG heavyweight neighbors.
In June, the company disclosed a tentative deal to take a 25% equity stake in the second phase of Sempra Infrastructure’s Port Arthur LNG export project in Southeast Texas. The deal could also land it 5 million metric tons/year (mmty) in offtake for a term of 20 years.
Also in June, Aramco signed a tentative deal to buy 1.2 mmty from an expansion at NextDecade Corp.’s Rio Grande LNG.
Aramco made its first investment in the LNG sector last year, taking a minority stake in MidOcean Energy LLC for $500 million. MidOcean holds stakes in the Gorgon, Ichthys, Queensland Curtis and Pluto LNG terminals in Australia. The company also has a stake in Peru LNG.
