Saudi Arabia: LNG ahead

In a reversal of strategy, Saudi Aramco is planning to import natural gas, and maintain current crude oil capacity

30/10/2017 15:35 AST

For decades, Saudi Arabia insisted that it wouldn't seek natural gas from abroad to boost the volumes produced within the kingdom-in particular it was a firm tenet of former oil minister Ali al-Naimi during his 21 years in the job that there'd be no imports. Now, that strategy has been abandoned. The search is on for a suitable source of liquefied natural gas.

Aramco's chief executive Amin Nasser, in an interview with Petroleum Economist [to be published in the December/January issue], said the kingdom's plan for the coming decade was to increase the share of domestically produced natural gas in the energy mix from 50% to 70%. But it wanted to supplement these volumes with imports.

"We're looking to international gas to identify opportunities for gas that we can also bring to the kingdom. Our gas can bring us up to 70% [in the energy mix]. We're looking at ways of going beyond the 70% and adding more gas." Essentially, then, by importing gas? "Yes, yes," Nasser replied. "Saudi Aramco is engaging currently with a lot of companies to identify opportunities for gas internationally."

There's been speculation that Aramco might be keen to invest in the Arctic 2 LNG project that's being developed by Russia's Novatek. But the Aramco chief executive said he didn't want to comment on speculation. When a gas-development-and-import deal was reached it would be announced.

Nasser also insisted that while Aramco was becoming involved in a wide range of different upstream and downstream ventures, it wasn't abandoning oil. Far from it. "The kingdom is diversifying its economy," he said. "Instead of depending on only one engine, crude oil, it's looking at multi-engines for a sustained economy, which is something great and good." At the same time, "Vision 2030 talks about strengthening the position of oil by diversifying our investment in oil and gas. Going down the value chain, getting into more integrated petrochemicals, adding more and more value to our products."

When Vision 2030 was announced, senior figures in the kingdom suggested that crude oil capacity might be raised to 15m barrels a day, or even 20m b/d. But Nasser said nothing of this kind was on the cards for now. "At this stage, we're sticking to our maximum existing capacity. It has ample spare capacity. The maximum capacity for the kingdom is 12.5 [m b/d], for the company it's 12 [m b/d]. We're producing less than that. So, for the time being we're not thinking about expanding."

The Aramco chief executive would not discuss or answer any questions about the proposed IPO of the company.

Petroleum Economist