Saudi Aramco awarded contracts worth $10 billion for its Jafurah gas field, marking the beginning of the development of its giant unconventional gas field.
The world's largest oil exporting company has awarded 16 subsurface and engineering, procurement and construction (EPC) contracts, it said on Monday.
The deals were awarded to domestic and international service companies and involve several projects on the Jafurah programme.
Unconventional resources refer to those that required advanced extraction methods.
The capital expenditure at Jafurah – the largest non-associated gas field in Saudi Arabia – is expected to reach $68bn over the first 10 years of development.
The development of Jafurah will positively contribute to the kingdom’s energy mix and it has been made possible thanks to the close co-operation between more than 17 agencies, Prince Abdulaziz bin Salman Al Saud, Saudi Arabia’s Energy Minister, said.
“The government is committed to the empowerment of national companies such as Aramco, and no other energy company in the world is empowered to the same extent by the state, or by the Ministry of Energy which oversees the concession to develop the kingdom’s hydrocarbon resources,” Prince Abdulaziz said.
With an estimated 200 trillion standard cubic feet of gas in place, the Jafurah basin hosts the largest liquid-rich shale gas play in the Middle East.
This covers an area of 17,000 square kilometres. The production of natural gas at Jafurah is expected to increase to 2 billion standard cubic feet per day (scfd) of shale gas by 2030, from 200 million scfd in 2025, with 418 million scfd of ethane and around 630,000 barrels per day of gas liquids and condensates, which are feedstock for the petrochemical industry.
It will make Saudi Arabia, the Arab world’s largest economy, one of the world’s largest natural gas producers.
The project is a key component of Aramco’s long-term strategy and the company expects total overall life cycle investment at Jafurah to exceed $100bn.
Aramco expects to create more than 200,000 direct and indirect jobs through its unconventional gas programme at the Jafurah, North Arabia and South Ghawar fields.
This is a pivotal moment in the commercialisation of Saudi Arabia’s vast unconventional resources programme, Amin Nasser, chief executive and president of Aramco, said.
“It is a breakthrough that few outside the kingdom thought was possible and which has positive implications for energy security, economic development and climate protection.
“Gas has a critical role to play in the energy transition and it will help to significantly reduce emissions in the domestic energy sector, while providing a feedstock for low-carbon hydrogen and ammonia,” Mr Nasser said.
Jafurah is expected to contribute to Saudi Arabia’s goal of producing half of its electricity from gas and half from renewables as the kingdom pursues its 2060 net-zero target.
At peak production, Aramco’s unconventional gas programme is expected to replace around half a million barrels of crude oil a day that would otherwise have been used for domestic consumption.
The Jafurah gas development alone is expected to replace more than 300,000 barrels of crude oil a day at peak production.
“The development of Jafurah is a game-changer for our unconventional resources programme. It will be one of the most modern, cost-efficient shale development schemes in the industry and observe the highest environmental and safety standards,” said Nasir K Al Naimi, Aramco’s upstream senior vice president.
Aramco, like other major oil producers, has benefited from higher crude prices. Last month, the oil exporting company said its third-quarter profit more than doubled on higher crude prices and improved refining margins.
Net profit in the three-month period to the end of September increased to $30.4bn, from $11.8bn in the same period a year ago, the company said in a regulatory filing to the Tadawul stock exchange, where its shares are traded.
It unveiled plans to target net-zero carbon emissions by 2050 after the kingdom said it aimed to neutralise its emissions by 2060.