Aramco Revs Up Gas Boom as $100 Billion Jafurah Field Starts
(Bloomberg) -- Saudi Aramco started production from the largest single shale gas field outside of North America late last year, as it looks for alternative supplies to meet growing local electricity demand and free up crude oil for exports.
The Saudi government-run company is investing more than $100 billion in the Jafurah field, its first unconventional gas development. The project is expected to help Saudi Arabia free up about 1 million barrels a day of oil for sales overseas by the end of this decade, buttressing the kingdom’s status as the world’s biggest oil exporter.
Jafurah is expected to produce 2 billion standard cubic feet of gas by 2030, according to a statement. Aramco aims to boost overall gas production capacity to about 6 million barrels a day of oil equivalent by 2030, which would be an 80% increase over 2021 levels, the company said. It sees Jafuran and other gas expansions generating incremental cash flow of $12 billion to $15 billion by the end of the decade.
Across the Middle East, some of the world’s biggest oil producers are ramping up gas exploration and production efforts and are turning to unconventional deposits. Saudi Arabia and the United Arab Emirates, OPEC’s biggest and third-largest producers and also among the richest petrostates, are investing in fracking, or hydraulic fracturing, technology developed in the US to tap previously hard-to-extract supplies.
The unconventional deposit, which Aramco Chief Executive Officer Amin Nasser calls the company’s crown jewel, could “outclass US shale plays long-term” because of the greater size of its resources, lower investment costs and more liquid fuels available, Bank of America analysts wrote in 2024.
The additional liquid fuels produced with Jafurah’s gas are an added benefit that will help boost profit, Aramco says. These liquids will be available for chemicals or other projects, in which gas would have otherwise been used, and are also available for export.
Aramco has already started marketing condensate, a valuable and ultra-light oil that’s found with gas, from Jafurah to buyers mainly in Asia, Bloomberg reported this month.
Aramco also began operations at its Tanajib gas processing plant in December, according to the statement. Tanajib will process 2.6 billion standard cubic feet of gas per day when it reaches full capacity later this year, Aramco said.
“Jafurah and Tanajib significantly strengthen Aramco’s gas portfolio and expand our capacity at scale,” Chief Executive Officer Amin Nasser said in the statement. “Gas is central to our long-term growth strategy. It is expected to generate substantial earnings, meet rising domestic demand, support development across key sectors, and deliver significant volumes of high-value liquids.”
Aramco also brought online additional capacity at the Marjan oil field, according to the statement. The expansion at the offshore Marjan field, built across a series of artificial islands in the Persian Gulf, adds 300,000 barrels a day of crude production capacity.
Saudi Arabia burns as much as 1 million barrels a day of crude oil in power plants to power air conditioners during the desert kingdom’s hottest summer months, when temperatures can exceed 50C (122F). Gas-fired generation and solar power plants are set to help replace domestic oil demand, diverting that crude for export.
The company is currently pumping about 10 million barrels a day of crude oil, with about 70% of that for export.
(Adds Middle East shale expansion from fourth paragraph, Jafurah capacity and liquid exports from fifth.)
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