Saudi oil giant Aramco awards $10bn worth of contracts for Jafurah field development

    09 Dec 2021

    Saudi Arabian energy giant Saudi Aramco announced Tuesday that it would start the development of the Jafurah unconventional gas field, the largest non-associated gas field in the Kingdom, Oil and Gas Middle East reports.

    In addition, Aramco announced that it had awarded subsurface and engineering, procurement, and construction (EPC) contracts worth $10 billion. The capital expenditure of the Jafurah field is expected to reach $68 billion over the first ten years of its development. The field will make Saudi Arabia one of the world’s largest natural gas producers.

    “The development of Jafurah will positively contribute to the Kingdom’s energy mix and it has been made possible thanks to close co-operation between more than 17 different agencies. 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 Abdulziz, Saudi Arabia’s Minister of Energy said in a statement.

    The Jafurah basin hosts the most extensive liquid-rich shale gas play in the Middle East, with an estimated 200 trillion standard cubic feet of gas in place. The shale play covers an area of 17,000 square kilometers, and production is expected to increase from 200 million standard cubic feet per day (scfd) in 2025 to a sustainable rate of two billion scfd of gas sales by 2030.

    “This is a pivotal moment in the commercialization of Saudi Arabia’s vast unconventional resources program. 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 significantly reduce emissions in the domestic energy sector, while providing a feedstock for low-carbon hydrogen and ammonia,” Amin Nasser, Aramco’s president and CEO said in the statement.

    Jafurah will play a role in Saudi Arabia’s goal to produce half of its electricity from gas and half from renewables as it pursues a goal of net zero carbon emissions by 2030. Aramco’s unconventional gas program is expected to replace around half a million barrels of crude oil per day that would have been used in domestic production, the company said in a statement. Jafurah will replace more than 300,000 barrels of crude oil per day alone when it reaches peak production.

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    Calling simultaneously for net-zero carbon and for Opec to increase output pleases no-one.

    One alternative is to shift course and declare that oil consumption is going to fall, but that while it does, as much of it as possible should be met by the US and its allies, with strong environmental protections.

    The other is to explain directly that the low-carbon transition will be challenging and sometimes painful, but that the future holds less pollution, lower energy costs, better vehicles, greater energy security and, above all, a liveable climate.

    You may read how the US could resolve its dilemma on oil prices, the environment, and Opec+ here.

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