$110 billion Jafurah project to make Saudi Arabia a gas exporter

Saudi Aramco's Haradh Gas Plant in the Ghawar oil field is located northeast of the Jafurah field. (Saudi Aramco photo)
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Updated 25 February 2020

$110 billion Jafurah project to make Saudi Arabia a gas exporter

  • Development of eastern field will rebalance global market, experts tell Arab News
  • Jafurah could generate $8.6 billion a year in income

LONDON: A $110 billion project to develop a gas field in eastern Saudi Arabia will turn the global market on its head and make the Kingdom a gas exporter, industry analysts told Arab News on Saturday.

The Jafurah field — which lies southeast of Ghawar, the world’s largest conventional oil field — holds an estimated 200 trillion cubic feet of wet gas, and is capable of producing 130,000 barrels per day of ethane and 500,000 barrels per day of gas liquids and condensates.

Over 22 years, Jafurah could generate $8.6 billion a year in income and contribute $20 billion a year to the Kingdom’s GDP. 

Crown Prince Mohammed bin Salman has ordered that the gas produced at the field should be prioritized for domestic industry, but analysts believe there will be a surplus available for export.

The development of the Jafurah field will have ramifications not just for Saudi Arabia and its drive toward a cleaner energy mix, but also for the global gas market, with recent discoveries in the Eastern Mediterranean rapidly reshaping economies from Cairo to Ankara and fueling fierce rivalries in the process.

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 “The startup of Saudi Arabian exports could mark a major change to the global liquefied natural gas (LNG) balance in the second half of the decade given the size of the country’s conventional and unconventional gas resources,” James Waddell, senior global analyst at Energy Aspects in London, told Arab News.

Gas is now likely to become both an export product and a source of domestic power generation — a necessary stepping stone toward a cleaner energy mix that will also include more solar and wind power.

“Despite plans to meet Saudi Arabia’s growing power demand through gas and renewable energy generation, the country also has a high potential to have excess gas produced in the coming years that can be exported,” GlobalData power analyst Somayeh Davodi told Arab News.


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“Saudi Aramco has already completed a number of gas processing projects and has been able to successfully meet its growing domestic gas demand during past decades.

“The company is adding more than 2.5 billion cubic feet per day to its existing gas plants capacity in few years time, increasing the country’s gas processing capacity to 18.9 billion cubic feet per day by 2022.”

This massive increase in the Kingdom’s capacity comes at a time of upheaval in the global gas market. New players such as Egypt, Israel, Cyprus, Turkey and Lebanon threaten the dominance of Russia, which has long been the main supplier to Europe, and Qatar, the world’s biggest supplier of LNG.


Virtual oil summit planned amid ongoing market volatility

Updated 04 April 2020

Virtual oil summit planned amid ongoing market volatility

  • Meeting follows call from Saudi Arabia for urgent meeting and telephone diplomacy between Kingdom, Russia and the US

DUBAI: Leaders of the global oil industry are planning a crucial “virtual” summit next Monday amid ongoing volatility in crude prices and falling energy demand.

The meeting follows a call from Saudi Arabia on Thursday for an urgent meeting and a round of telephone diplomacy last week involving the Kingdom, Russia and the US, as well as meetings between policymakers and oil industry executives.

The summit is expected to involve the 11 members of OPEC as well as other oil producers from the OPEC+ group.

But exactly which countries will take part in the summit was still up in the air last night. 

Russian President Vladimir Putin was holding talks with executives from the country’s major oil companies before deciding whether or not to participate. The Russian leader has previously indicated his willingness to get involved in talks to help resolve the crisis in the global energy industry, but Russia was also the country that refused to take part in a round of deeper production cuts proposed by Saudi Arabia in Vienna last month, sparking the current price war.

In response to that refusal, the Kingdom increased production and lowered its selling prices. On Sunday, Saudi Aramco, which has pushed output to a record 12.3 million barrels per day, is scheduled to announce its “official selling prices” (OSP) for the month of May, expected to show a continuation of the deep levels of discount to attract customers, especially in Asia, in the battle for global market share. 

Brent crude continued its rollercoaster ride on global markets on Friday, dipping nearly 5 percent before hitting a high of 17.5 percent up at $34.91, before paring gains to about $33.

The options for the producers at Monday’s meeting are limited, in the face of an unprecedented drop in global oil demand. By some estimates, more than 20 million barrels of daily demand was lost last month, the biggest ever contraction in oil history.

Saudi Arabia and Russia, which between them produce around 23 million barrels per day, are unlikely to be willing to take all the pain of bigger cuts without an offer from the Americans.

US President Donald Trump tweeted on Thursday that he expected between 10 million and 15 million barrels of oil to be taken out of supply, but he did not specify where this would come from. Meetings were expected to take place at the White House with oil industry executives and policymakers on Friday.

Daniel Yergin, Pulitzer Prize-winning oil expert, said: “The ‘when,’ ‘how’ and ‘who’ of the potential deal remain unclear. And the larger the universe of players the more difficult it will be to implement an agreement.”

OPEC+ consists of the 11 OPEC members, led by Saudi Arabia, plus 10 non-OPEC producers, of which Russia is by far the biggest.

The involvement of the US in the Monday meeting is also unclear. America is not an OPEC member, but US oil executives have attended OPEC deliberations in the past. American participation in any new rounds of output cuts will be constrained by the fact that the US oil industry is made up of private companies — as opposed to state-directed corporations — whose interests diverge.

While big players including Exxon Mobil and Chevron might be willing to take some advice from the White House, the smaller companies in the Texas shale fields are more focused on the immediate financial repercussions of the past month’s volatility.