DAMMAM, 17 May 2004 — Saudi Arabia is currently evaluating its gas reserves and consumption to see if more gas projects are needed in the future, according to Prince Faisal ibn Turki, adviser in the Ministry of Petroleum and Minerals.
Prince Faisal was making his lead presentation on “The Kingdom’s Gas Strategy” during the second day of the First Saudi Arabian International Gas Conference at the Eastern Province Chamber of Commerce and Industry here.
He said gas sector was an important factor in the Saudi economy, contributing SR100 billion to the national income and representing 15 percent of the country’s GDP. It also created more than 150,000 jobs including 35,000 direct jobs in the Kingdom. According to the prince, the projected industrial investment using gas during 2006 to 2009 will be about SR75 billion and projects signed with foreign partners will boost the national industry because the international oil companies will buy 40 percent of their products from the Saudi market.
On the employment front, he said the projects will have to achieve 65 percent Saudization after their first year of operation and 75 percent by the end of their third year.
Responding to a question, the prince maintained that there is enough gas currently produced to supply the new projects. “The gas allocated (for the SR75 billion industrial and petrochemical investments) is available from currently producing projects or others under construction,” he said. “The gas will not be supplied from any of the new ventures (in Rub Al-Khali). For the next five years, the gas will be mainly from Hawiyah and Haradh,” he added.
Saudi Aramco Vice President Abdullah Al-Saif said that the oil company will invest between 20-30 percent into each of the four new projects. “However, the actual capital investment is yet to be determined,” he clarified.
During his keynote address, Minister of Petroleum and Mineral Resources Ali Al-Naimi said once the new gas projects go on stream, the increase production will open a new source of revenue for the Saudi economy and provide excellent business opportunities to the domestic private sector.
“The Kingdom’s objectives for these investments are to increase gas reserves; to increase production and meet development requirements and to diversify income sources,” Al-Naimi said.
The initial investment required during the first exploration phase of an agreement signed in January this year is expected to exceed SR3 billion. The agreement is part of Kingdom’s concerted effort to expand its reserves of non-associated natural gas — obtained from gas wells independent of oil-field production — and its gas production capacity.
He hoped that the new investments in the gas sector will enhance production in the country and support the Master Gas System. The demand for gas, he said, is expected to rise to 12 billion cubic feet per day by 2025 with the new projects more than able to meet the domestic requirements. Surplus production will be exported.
Al-Naimi said that the focus of the new ventures would be on areas where no exploration work has been undertaken.
The minister said Saudi Arabia relied heavily on gas for its energy consumption needs and ranked highly among countries that depended on this resource for energy. “In Saudi Arabia, of the total energy consumption in 1990, 35 percent was used in form of gas. This rose to 40 percent in 2002 and is expected to reach 51 percent in 2008.
He said that the proven gas reserves in the country were around 235 trillion cubic feet. It currently produces 6.9 billion cubic feet of gas per day in the Master Gas System.
The country also produces 345 million barrels of natural gas liquids per year and is the world’s largest exporter.
Saudi Arabia is pushing for more gas development to meet its increasing domestic demand for power generation, water desalination and petrochemical plants.
On another note, during a press conference, Al-Naimi said that Saudi Arabia, was capable of producing an extra 2.5 million barrels of oil per day “within a week” if needed. “We have 10.5 million bpd production capacity and based on today’s OPEC quota, there was 2.5 million bpd of spare capacity. “No one should cast doubt on Saudi Arabia’s ability to produce what it says it will produce.”
Today the gas conference will have three sessions primarily concentrating on emerging investment opportunities in primary upstream petrochemical projects.
