25 October 2016

RIYADH — Continued investment in gas in Saudi Arabia has resulted in steadily rising output over the years, with a sizable ramp up in production in the last decade, according to a report on natural gas and Vision 2030 released by Jadwa Investment.

It said “despite the rapid rise in gas output, gas consumption has grown as fast as production. Competing demands, primarily from two sectors, petrochemicals and electricity generation, has meant the Kingdom has consistently consumed all its gas. The pace of growth in Saudi gas demand is not likely to ease, and total electricity consumption will be further pushed up by industrial development, in line with the Vision 2030, and rising population levels.”

As per the report, Saudi Arabia will need to grow gas output by an annual average rate of either 3.7 percent, in the base case scenario, or 6.6 percent, in the high case scenario, in the decade to 2030. According to Jadwa Investment, the government could “save $71 for every barrel of crude oil substituted by a barrel of equivalent of gas in electricity generation in 2030,” it added.

The greater challenge in exploiting gas will occur in the decade after 2020, and will likely come from shale or tight gas.

While a steady supply of gas is expected to come online between now and 2020, according to the report, the greater challenge in exploiting gas will occur in the decade after. The report mentioned that considering the vast reserves of unconventional gas in the Kingdom, the majority of additional supply from 2020 onwards, up to an additional 14 bcf/d, according to the high case scenario, will likely come from shale or tight gas.

Further, the report said the centrality of gas in Vision 2030, and the unsustainable and costly alternative of using crude oil in electricity generation, will help ensure gas development is prioritized to meet the demand by 2030.

© The Saudi Gazette 2016