Saudi Aramco ‘on way to becoming gas powerhouse’

Liquefied natural gas storage tanks at an oil refinery. Global expenditure on upstream gas is set to grow to $1.13 trillion by 2025, according to analysts. (Shutterstock)
Updated 12 November 2018

Saudi Aramco ‘on way to becoming gas powerhouse’

LONDON: Saudi Aramco has outlined to Arab News how it plans to massively ramp up its multibillion-dollar natural gas business, both in the Kingdom and overseas, as gas gradually replaces coal and oil in global power generation.
Gas is viewed as a cleaner energy source than coal or oil in power stations, and there is soaring demand in Asia.
“Gas is already a large global business and is expected to be among the fastest-growing fuels (60 percent growth) over the next quarter-century. And LNG (liquefied natural gas) is expected to make up almost half of global gas trade over the same period,” Aramco said in a statement.
“We already produce about 14 billion standard cubic feet (bscfd) of gas, which is on the road to being expanded to 23 bscfd, which will increase our share of cleaner gas in domestic utilities from the current 55 percent to 75 percent, the highest in G-20.
“When combined with our move toward international gas business, Saudi Aramco is on the way to becoming a gas powerhouse in addition to its huge strength in oil.”
Aramco said that bolstering its position in the global gas and LNG business would “strengthen our competitive advantage, and diversify operations.”
Aramco this year signed a memorandum of understanding with Royal Dutch Shell to jointly pursue global gas business opportunities, including upstream development, liquefaction projects and other aspects of the gas value chain.
According to classification society DNV GL’s latest Energy Transition Outlook, by 2025 expenditure on upstream gas will grow to $1.13 trillion.
Saudi Arabia’s gas expansion is set to free up more oil for export, boosting national revenue and potentially opening up new areas for employment, said Iman Nasseri, a managing director at London-based consultancy FGE.
Jim Henderson, an expert in Middle Eastern energy and geopolitics at the Oxford Institute of Energy Studies, said: “Lifting the amount of oil for export is part of an approach that aims to have as much oil available for sale overseas in order to more effectively manage global demand for crude.”
Aramco’s gas exploration efforts have resulted in finding big volumes of shale gas in the Jafurah Basin in southeastern Saudi Arabia. “They are highly promising quantities and economically feasible as they contain a high rate of liquids; activities to evaluate the reserves are ongoing,” said Aramco.
“Unconventional gas contribution will reach to 15 percent of the total gas production of 23 billion bscfd per day in the gas program over the next 10 years.”
Aramco views shale as a “strategic investment” that would help to further supplement “our vast conventional gas resources.” It would be used for domestic utilities and fuel, as well as feedstock “for our industries, including petrochemicals.
The Kingdom’s LNG story has highlighted the evolving Saudi-Russia energy alliance. Speaking on the sidelines of a recent investment summit in Riyadh, Energy Minister Khalid Al-Falih said the Kingdom aimed to acquire 30 percent of Russian gas producer Novatek’s $21 billion liquefied natural gas project in the Arctic.
In 2016, OPEC and Russia struck an agreement to cut crude production following a build-up in inventories that led to a price slump.
Asked how important LNG investment overseas was for Aramco, the company said: “Saudi Aramco aims to diversify operations and expand our international gas business. We’re committed to increasing production capacity to take advantage of opportunities resulting from increased use of gas — both as an energy source and as a feedstock for the chemicals industry.”
Trevor Sikorski, head of natural gas and carbon research at consultancy Energy Aspects in London, told Arab News: “By taking equity stakes in LNG operations, they would cover the possibility of rising prices via a capital investment, rather than through contracts that could expose them to price fluctuations going forward.”
Aramco’s recent worldwide oil-refinery investments in countries such as Malaysia give it a presence in a region where it could market LNG from places such as Russia, said Robin Mills, CEO of Dubai-based Qamar Energy.
He told Arab News: “(Aramco sees) Asia as at the heart of gas and oil demand growth.”
Geraldine Duffour, of France-based energy research firm Enerdata, said: “Since 2000, Saudi Arabia’s energy demand has more than doubled.”
She added: “As Saudi Arabia is keeping its domestic oil production for exports, gas has been increasingly used in the power sector (from 46 percent of power generation in 2000 to 59 percent in 2017) and total gas consumption has been rising by around 6 percent per year since 2000.”
In 2016, Aramco announced plans to double gas production within 10 years, and to develop Saudi gas fields, including shale deposits.
Al-Falih said at the India Energy Forum in New Delhi last month that Aramco was open to the idea of marketing some LNG from the proposed Russian Arctic LNG 2. reported Al-Falih as saying: “We have looked at projects in Africa and the Mediterranean, and, of course, the Arctic with some Russian companies. The idea is that Aramco will trade (LNG) globally and bring some to India and other markets.” 

Gulf Marine CEO quits after review sparks profit warning

Updated 22 August 2019

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.