Saudi Aramco to extend shale gas search

Jubail.pngThe summer has seen several reports of reductions in ethane availability to Saudi petchem plants.

This seems to have been due to two causes:

• Saudi has cut back oil production by a third (4mbd) in order to comply with its 8.3mbd OPEC quota at a time of reduced global demand. This has also reduced the production of associated gas, including ethane.
• In addition, gas has had to be used to supply growing demand for power generation, which has also required the use of 750kpd of oil, according to International Energy Agency estimates.

Now Aramco’s CEO, Khalid al-Falih, has signalled that the company’s $130bn exploration plans are focusing on unconventional resources such as shale gas.

In an interview with the Financial Times, he notes that 4.3bn cubic feet has been added to Saudi’s gas reserves in the past 5 years. And he suggests Saudi could double current gas reserves via unconventional sources.

Shale gas exploration has, of course, already delivered major new feedstock availability for US petchem producers, with US natural gas prices at their lowest level for 7 years. Now al-Falih is suggesting the Kingdom will harness the expertise generated by the international oil companies (IOCs) in order to boost its own production in this area.

He also confirms that Aramco remains “enthusiastic” about its current JVs in refining and petchems with partners such as Sinopec, Sumitomo, Dow, ExxonMobil, Shell and TOTAL. Increased gas availability would certainly go a long way towards enabling higher petchem production levels in the Kingdom over the medium term.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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