$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.

Israel cenbank’s Abir says buying corporate bonds to prevent layoffs

Updated 08 July 2020

Israel cenbank’s Abir says buying corporate bonds to prevent layoffs

JERUSALEM: The Bank of Israel’s decision to start buying corporate bonds should enable companies to issue debt and prevent further layoffs as a result of the coronavirus pandemic, deputy governor Andrew Abir said.
On Monday, the bank held its benchmark interest rate at 0.1 percent but said it would buy 15 billion shekels ($4 billion) of higher-rated corporate bonds in the secondary market.
“It’s not that the corporate bond market was not functioning or because spreads have widened dramatically, but rather the understanding that over the next 6-12 months, there’s going to be a need for issuance in that market,” Abir told Reuters.
The central bank began purchases on March 15 of up to 50 billion shekels of government bonds, which has helped reverse a spike in government and corporate yields.
The index of bonds issued by Israel’s 20 largest firms has gained 1.4 percent following the central bank’s announcement, following three weeks of declines.
Noting that more than 40 percent of corporate credit comes from the bond market, Abir said that fear of being frozen out the market could lead to cash hoarding and cost-cutting, including jobs.
“We want to prevent a situation where a company is having question marks in its ability to fund themselves (and) lays off another 1,000 workers.”
Unemployment is already more than 20 percent and could worsen after some COVID-19 restrictions were reimposed.
Abir said risks to the central bank’s scenario of a record six percent economic contraction in 2020 will be “to the downside” if the infection rate stays high.
Analysts are split over whether the central bank will lower its key rate to zero percent or negative. The Bank of Israel has indicated it is reluctant to do so.
“We still have more measures that we can do. QE can be increased. We haven’t run out of our policy options,” Abir said.