Aramco Awards $25 Billion Contracts for Gas Expansion

Aramco, one of the world’s leading integrated energy and chemicals companies, has awarded contracts worth more than $25 billion to advance its strategic gas expansion, targeting sales gas production growth of more than 60% by 2030 compared to 2021 levels. The contracts, announced on June 30, 2024, cover the phase two development of the vast Jafurah unconventional gas field, the phase three expansion of the Master Gas System, new gas rigs, and ongoing capacity maintenance.

Context and Background

Aramco’s strategic gas expansion is a cornerstone of the Kingdom’s efforts to diversify its energy mix and reduce carbon emissions. The Jafurah field, estimated to contain 229 trillion standard cubic feet of raw gas and 75 billion stock tank barrels of condensate, is the largest unconventional gas field in Saudi Arabia. Phase one of the Jafurah development program, which began in November 2021, is progressing on schedule, with initial start-up anticipated in the third quarter of 2025. The Master Gas System, an extensive network of pipelines connecting Aramco’s key gas production and processing sites, has been instrumental in reducing flaring and providing lower-emission energy to domestic customers since 1982.

Key Details

Aramco has awarded 16 contracts, worth around $12.4 billion, for phase two development at Jafurah. This includes constructing gas compression facilities, pipelines, expanding the Jafurah Gas Plant, and building new Riyas Natural Gas Liquids (NGL) fractionation facilities in Jubail. Additionally, 15 lump-sum turnkey contracts, worth approximately $8.8 billion, have been awarded for the phase three expansion of the Master Gas System, which will increase the network’s capacity by 3.15 billion standard cubic feet per day (bscfd) by 2028 through the installation of around 4,000 km of pipelines and 17 new gas compression trains. Furthermore, 23 gas rig contracts worth $2.4 billion and two directional drilling contracts worth $612 million have been awarded. Thirteen well tie-in contracts at Jafurah, worth $1.63 billion, were awarded between December 2022 and May 2024.

Aramco President & CEO Amin H. Nasser stated, “These contract awards demonstrate our firm belief in the future of gas as an important energy source, as well as a vital feedstock for downstream industries. The scale of our ongoing investment at Jafurah and the expansion of our Master Gas System underscores our intention to further integrate and grow our gas business to meet anticipated rising demand. This complements the diversification of our portfolio, creates new employment opportunities, and supports the Kingdom’s transition towards a lower-emission power grid, in which gas and renewables gradually displace liquids-based power generation.” Nasser also expressed appreciation for the continuous support provided by His Royal Highness Prince Abdulaziz bin Salman bin Abdulaziz Al Saud, Minister of Energy, noting the Minister’s keenness to make the energy industry in the Kingdom a global model in growth, reliability, development, and diversity.

Implications and Impact

The expansion of Aramco’s gas production and infrastructure has significant implications for both the domestic and international energy landscape. By increasing gas supplies, Saudi Arabia aims to provide cleaner-burning fuel for power generation, industry, and utilities, thereby reducing greenhouse gas emissions and supporting the Kingdom’s transition to a lower-emission power grid. The development of the Jafurah field and the Master Gas System also creates new employment opportunities and stimulates economic growth. On the international front, the increased gas production could enhance Saudi Arabia’s position as a reliable energy supplier and potentially open new export markets for natural gas and its derivatives, such as ethane, NGL, and condensate. Moreover, the project reinforces Aramco’s commitment to innovation and efficiency, as evidenced by its pioneering use of associated gas and near-zero routine flaring since 2012.

Vision 2030 Alignment

This strategic gas expansion aligns closely with Saudi Arabia’s Vision 2030, which aims to diversify the economy, reduce dependence on oil, and promote sustainable development. By investing in gas, Aramco is supporting the Kingdom’s goals of achieving a lower-emission energy mix, creating jobs, and enhancing the reliability and diversity of energy supplies. The project also contributes to the development of a skilled workforce and the growth of downstream industries, further advancing the Kingdom’s economic transformation. As Saudi Arabia continues to modernize and diversify its energy sector, Aramco’s gas expansion stands as a testament to the nation’s forward-looking approach and its commitment to global energy security and sustainability.

20 Questions

Q1. What is the value of the contracts awarded by Aramco for its strategic gas expansion?

A1. Aramco has awarded contracts worth more than $25 billion to advance its strategic gas expansion, targeting sales gas production growth of more than 60% by 2030 compared to 2021 levels.

Q2. What are the main components of Aramco’s gas expansion?

A2. The expansion includes phase two development of the Jafurah unconventional gas field, phase three expansion of the Master Gas System, new gas rigs, and ongoing capacity maintenance.

Q3. How much is Aramco investing in the Jafurah field?

A3. Aramco expects total overall lifecycle investment at Jafurah to exceed $100 billion, with production reaching a sustainable sales gas rate of two billion standard cubic feet per day by 2030.

Q4. What is the Jafurah field’s estimated gas reserve?

A4. The Jafurah unconventional gas field is estimated to contain 229 trillion standard cubic feet of raw gas and 75 billion stock tank barrels of condensate.

Q5. When is phase one of the Jafurah development expected to start up?

A5. Phase one of the Jafurah development program, which commenced in November 2021, is progressing on schedule, with initial start-up anticipated in the third quarter of 2025.

Q6. What is the Master Gas System?

A6. The Master Gas System is an extensive network of pipelines that connects Aramco’s key gas production and processing sites throughout the Kingdom of Saudi Arabia.

Q7. What will the phase three expansion of the Master Gas System achieve?

A7. The phase three expansion will increase the network’s total capacity by an additional 3.15 billion standard cubic feet per day by 2028, through the installation of around 4,000 km of pipelines and 17 new gas compression trains.

Q8. How many contracts were awarded for phase two development at Jafurah?

A8. Aramco awarded 16 contracts, worth a combined total of around $12.4 billion, for phase two development at Jafurah.

Q9. What work will be involved in the Jafurah phase two development?

A9. The work includes constructing gas compression facilities and associated pipelines, expanding the Jafurah Gas Plant, and building new Riyas Natural Gas Liquids fractionation facilities in Jubail.

Q10. How many lump-sum turnkey contracts were awarded for the Master Gas System expansion?

A10. Fifteen lump-sum turnkey contracts, worth a combined total of around $8.8 billion, have been awarded to commence the phase three expansion of the Master Gas System.

Q11. What did Aramco President & CEO Amin H. Nasser say about the contract awards?

A11. Nasser stated that the awards demonstrate Aramco’s belief in gas as an important energy source and vital feedstock, and underscore its intention to grow its gas business to meet rising demand.

Q12. How does the gas expansion support the Kingdom’s energy transition?

A12. The expansion supports the transition towards a lower-emission power grid, in which gas and renewables gradually displace liquids-based power generation, reducing greenhouse gas emissions.

Q13. What is the role of the Ministry of Energy in the Master Gas System expansion?

A13. The expansion is conducted in collaboration with the Ministry of Energy, which provides continuous support and guidance to advance the Kingdom’s energy industry.

Q14. How many gas rig contracts were awarded?

A14. Twenty-three gas rig contracts worth $2.4 billion have been awarded, along with two directional drilling contracts worth $612 million.

Q15. What are well tie-in contracts at Jafurah?

A15. Thirteen well tie-in contracts at Jafurah, worth a total of $1.63 billion, were awarded between December 2022 and May 2024, to connect wells to processing facilities.

Q16. How has the Master Gas System contributed to emissions reduction?

A16. Since 1982, the network has transported associated gas instead of flaring it, helping Aramco achieve near-zero routine gas flaring and maintain a flare volume of less than 1% of total raw gas production since 2012.

Q17. What products will be produced from the Jafurah field?

A17. The Jafurah field will produce sales gas, as well as significant volumes of ethane, natural gas liquids, and condensate, which are valuable feedstocks for downstream industries.

Q18. How does this expansion create employment opportunities?

A18. The expansion involves a vast network of suppliers and service providers, creating new jobs in construction, engineering, operations, and related sectors across the Kingdom.

Q19. What is the significance of Aramco’s gas expansion for global energy markets?

A19. The expansion enhances Saudi Arabia’s position as a reliable energy supplier and could open new export markets for natural gas and its derivatives, contributing to global energy security.

Q20. How does the gas expansion align with Saudi Vision 2030?

A20. It supports Vision 2030 by diversifying the economy, reducing dependence on oil, promoting sustainable development, and enhancing the reliability and diversity of energy supplies.

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