Saudi Aramco, the Saudi state oil company, has begun operations in a shale gas field in the country, considered one of the largest in the world. The state-owned company is seeking to strengthen its energy supply and, at the same time, use more crude oil for export.
Saudi Aramco Executive Vice President Ashraf Al-Ghazzawi told reporters at the company’s headquarters in Dhahran, Saudi Arabia, on Wednesday that the Jafurah gas field had “started production.”
“If you look at Aramco today, it is a big company in the gas sector,” Al-Ghazzawi said, indicating that natural gas will support the energy supply needed for Saudi Arabia’s industrial diversification and other economic reforms.
“We are developing our gas business,” he added.
The $100 billion Jafurah gas field project located near the Persian Gulf in eastern Saudi Arabia has a production capacity in the first phase of 12.6 million cubic meters per day, according to the Saudi government.
The field’s confirmed gas reserves total 6.4 trillion cubic meters, the equivalent of about 70 years of Japan’s liquefied natural gas (LNG) imports.
Investment in the project has been active. In August, Aramco announced it would raise $11 billion from a consortium led by U.S. asset manager BlackRock to help develop the field. In 2024, Aramco has ordered the construction of a factory and other related projects worth $25 billion.
Shale gas is produced from layers of shale located at great depths. Extraction was once considered difficult, leading to high production costs. The development of technologies in the 2000s, such as hydraulic fracturing, called fracking, made it possible to produce shale gas at a relatively low cost.
This led to a shale revolution in the United States, leading to energy self-sufficiency. Another result has been a relative decline in the importance of Gulf countries, such as Saudi Arabia, as energy suppliers to the United States.
Technologies used in the US shale revolution are also being used in the Jafurah gas project. Aramco CEO Amin Nasser says Saudi Arabia will usher in a new shale revolution.
Besides Jafurah, Saudi Arabia is working to expand the use of associated gas found in crude oil fields, aiming to increase production to around 462 million cubic meters per day by 2030, an increase of around 80% from 2021.
The main factor driving Saudi Arabia’s efforts to exploit its natural gas resources is the country’s rapidly growing energy demand.
Around 60% of Saudi electricity generation comes from gas-fired thermal power plants, and the rest mainly from oil-fired power plants.
The country hopes to increase the share of gas in this mix, allowing it to meet demand and, at the same time, reduce environmental impact. This will also free up more crude oil for export, helping to meet growing global demand and increase revenues.
Saudi Arabia, with a rapidly growing population and many young people, is implementing economic reforms to diversify its industries and reduce its dependence on oil revenues. In particular, it is working to attract data centers to artificial intelligence, which consume huge amounts of electricity.
Ensuring demand for LNG (liquefied natural gas) – considered a low-carbon and environmentally friendly energy source, as well as a bridge to decarbonization – is also a priority. In recent years, Aramco has acquired stakes in LNG projects in the United States, Australia and other countries.
Saudi Arabia has long been one of the world’s largest oil-producing countries. Its crude oil exports are among the largest on the planet, making it a crucial energy supplier to Japan, China and Europe. But in the LNG sector, neighboring Qatar is the leader.
Al-Ghazzawi said the main objective is to meet growing domestic demand.
“All ongoing gas expansion projects are aimed at domestic consumption,” including Jafurah, he said.
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