Saudi Aramco is evaluating options for a sharp increase in natural gas supply from the Jafurah field, including potential exports and changes to the structure of its gas operations.
The $100 billion Jafurah development began production last year, while its second phase is expected to start by 2030. Aramco expects its overall gas production to increase by around 80 per cent from 2021 levels by the end of the decade.
Saudi Arabia is expected to consume a significant share of the additional production domestically. The kingdom is shifting parts of its power generation system towards natural gas, which could allow it to redirect more crude oil towards exports. Rising electricity requirements from data centres and artificial intelligence infrastructure could further increase domestic gas demand.
Despite this, Saudi Arabia could eventually have substantial volumes available for overseas markets. Wood Mackenzie estimates that annual gas production of around 180 billion cubic metres could leave as much as 50 billion cubic metres of surplus supply each year after domestic consumption.
Saudi Arabia Weighs LNG Route
Developing liquefied natural gas exports is among the options available to Saudi Arabia. Such a move could establish the kingdom as another regional LNG supplier alongside the UAE and Oman, although it would require investment in liquefaction and export infrastructure.
An LNG export terminal designed to process gas from the second phase of Jafurah had been considered, but the proposal has been put on hold as Saudi Arabia focuses on meeting domestic requirements. Aramco is also examining ways to unlock capital from its expanding gas operations. Plans under consideration include separating the gas business into a standalone company that could potentially be listed in the future. The initiative is known as Project Gamma.
The move forms part of a wider effort to generate greater value from Aramco's asset base. The company is also examining opportunities involving real estate, power, water and oil-storage assets outside its main crude production and processing operations. Aramco has previously raised capital through infrastructure transactions. In 2021, it separated its oil pipeline assets and sold a 49 per cent stake to a group of investors that included EIG and Mubadala. A lease-and-leaseback transaction involving its gas pipelines followed in 2022.
The gas expansion is unfolding alongside Saudi Arabia's broader economic diversification drive, which has channelled investment into tourism, aviation, artificial intelligence and other non-oil sectors.