GAS

DEMAND AND ENERGY TRANSITION PUT SAUDI’S FOCUS ON GAS

Aramco, one of the world’s largest integrated energy and chemicals companies, recently announced contracts worth over USD 25 billion to drive its strategic gas expansion, with a target to boost sales gas production by more than 60% by 2030 compared to 2021 levels. This significant investment underscores the company’s commitment to natural gas as both a vital energy source and a key component for downstream industries.

The contracts focus on phase two development of the Jafurah unconventional gas field, the phase three expansion of Aramco’s Master Gas System, the commissioning of new gas rigs, and ongoing capacity maintenance. Jafurah, a cornerstone of Aramco’s gas strategy, holds an estimated 229 trillion standard cubic feet of raw gas reserves, positioning it as one of the largest shale gas fields in the world.

These contracts align with Aramco’s outlook on the promising future of gas as an essential energy source and feedstock. The company’s ongoing investments in Jafurah and the Master Gas System are in line with rising global demand for cleaner energy sources, and the kingdom’s transition to a lower-emission power grid. The company expects gas to displace oil in power generation, helping to reduce emissions while supporting economic diversification and job creation in the country.

The contracts awarded include USD 12.4 billion for phase two at Jafurah, which involves the construction of gas compression facilities, pipelines, and the expansion of the Jafurah Gas Plant. This expansion will also see the development of the new Riyas Natural Gas Liquids (NGL) fractionation facilities in Jubail, enabling the processing of NGL from Jafurah. Additionally, USD 8.8 billion in contracts have been allocated for phase three of the Master Gas System, which will increase the network’s capacity by 3.15 billion standard cubic feet per day (bscfd) by 2028.

A CLEANER ALTERNATIVE

Aramco's push into natural gas comes at a time when global demand for cleaner fuels is on the rise, driven by the energy transition and the need for more sustainable solutions. Natural gas is seen as a crucial bridge in this transition, a lower-carbon alternative to coal and oil for power generation.

"Global gas demand is projected to grow past 2030 in all scenarios, with a total projected growth of between 10 and 15 percent. Even in faster decarbonization scenarios, growth is expected until 2030–40," according to a new report by global consultant McKinsey on global gas demand. 

With a wide range of applications, natural gas is expected to play a pivotal role in the energy transition, with global demand expected to grow past 2030 before dropping as the energy transition progresses, according to McKinsey.

As countries strive to secure stable energy supplies amid geopolitical tensions, investments in large-scale projects like Jafurah signal confidence in the long-term viability of natural gas. 

In addition, Saudi Arabia is also targeting to allocate considerable gas volumes for blue hydrogen and blue ammonia generation to supply both domestic and international markets, according to the Gas Exporting Countries Forum.

GAS SYSTEM

The expansion of Aramco’s Master Gas System, which has been in operation since 1982, is another critical element of its gas strategy. This vast pipeline network transports both associated gas (a byproduct of oil production) and sales gas, providing a reliable supply to industrial and utility sectors across the Saudi Arabia. The system also plays a crucial role in reducing greenhouse gas emissions, as it has helped Aramco achieve near-zero routine gas flaring, a major contributor to emissions in oil production.

As global efforts to curb emissions intensify, Aramco’s investments in gas reflect a broader industry trend of balancing energy security with sustainability. The company’s gas expansion not only supports Saudi Arabia’s domestic goals under Vision 2030, but also contributes to the global supply of cleaner energy, further solidifying its role in the evolving energy landscape.

With phase one of Jafurah’s development already underway and production expected to begin in 2025, Aramco’s gas strategy will be essential in shaping the future of energy both in Saudi Arabia and beyond

Earlier in the year, Aramco awarded engineering, procurement, and construction (EPC) contracts worth USD 7.7 billion for a major expansion of its Fadhili Gas Plant in the Eastern Province.

The project is expected to increase the plant’s processing capacity from 2.5 to 4 bscfd. The additional 1.5 bscfd will help the company realise its 2030 gas output target.

The Fadhili Gas Plant expansion, expected to be completed by November 2027, is also expected to add 2,300 metric tonnes to the daily sulphur production.

Aramco awarded the EPC contracts for the Fadhili Gas Plant expansion project to Samsung Engineering Company, GS Engineering and Construction Corporation, and Nesma and Partners.