Overview

Saudi Arabia holds the fourth-largest reserves of gas in the world, estimated at 8.2 trillion cubic metres by the BP Statistical Review of World Energy 2014. It is the eighth-largest producer of gas, with output of 103 billion cubic metres in 2013, but consumes all it produces for domestic needs as well as for reinjection to maximise crude oil exports.

State-owned Saudi Aramco expects demand to grow by around 3% per year until 2030, driven by the country's rising power consumption and a strategic goal to achieve a 10% share of the world’s petrochemicals production by 2015.

Nearly all of Saudi Arabia’s gas production is associated gas, which means output is restricted by OPEC oil production quotas. However, the increased demand for gas has prompted exploration of non-associated gas fields.

Saudi Aramco claims only 15% of the country has been adequately explored for gas and expects to find considerable non-associated reserves.

Progress developing non-associated gas discoveries has been slow over the past three years. The Karan gas project started up in July 2011 and is now producing 28.32 million cubic metres per day (MMcm/d). The Wasit development in the Arabian Gulf is set to process 71 MMcm/d of non-associated gas from the Arabiyah and Hasbah fields when it comes online in 2014.

Saudi Arabia could hold 18.3 tcm of unconventional gas resources, according to a study conducted by Baker Hughes in 2012. Aramco is exploring the potential of the country's tight and unconventional plays.

Engineering consultants submitted bids to conduct studies of shale formations and undertake FEED work at three sites – the Rub al-Khali (Empty Quarter), South Ghawar and Jalamid in the northwest – in January 2014. However Aramco has yet to award any FEED contracts. The technical and geological complexity of shale projects, as well as the lack of water supply or significant gas infrastructure, and low domestic gas price ($0.75/MMBtu), means progress in exploiting shale gas is likely to be slow.

Aramco manages all of Saudi Arabia’s oil and gas reserves and production and holds a monopoly on the development of the kingdom’s resources. Since 2003, partnerships with other companies – including Shell and Sinopec – have been allowed for the exploration of the Empty Quarter, but exploration efforts have so far been unsuccessful.

Page updated: 12/09/2014