Saudi Arabian Oil Co., the world's biggest oil company, will continue exploring for domestic natural gas resources as it seeks to meet rapidly rising demand in the Middle East's largest economy, its top executive said Tuesday.
"The kingdom is committed to further natural gas exploration because the kingdom needs more gas" for its own internal consumption and demand, Saudi Aramco's chief executive Khalid Al Falih said, speaking at the new King Abdullah University for Science and Technology campus, located north of Jeddah on the Red Sea coast.
Aramco has had its "successes in exploration and recovery," and plans to increase its natural gas supplies by 25% from projects such as the Karan gas field development, Al Falih said without providing a timeframe.
Al Falih's comments come a day after Aramco awarded two contracts to help it implement gas projects worth up to $6.9 billion to SNC-Lavalin Group Inc. (SNC.T) and KBR Inc. (KBR).
Gas demand in the kingdom has risen rapidly in recent years, driven by a petro-dollar-fired economic boom that has seen billions of dollars spent on industrial and infrastructure projects. It is hoped that new exploration projects in the Empty Quarter desert, also known as Rub Al Khali, and other areas will produce more gas reserves to help meet future demand.
The contracts to SNC-Lavalin and KBR for project management and early engineering works on the Wasit gas development program and the Shaybah natural gas liquids project in the Empty Quarter, are part of the kingdom's plans to secure additional gas resources to meet the rising needs.
The kingdom has the world's fourth-largest proven gas reserves at 267 trillion cubic feet.
Gas exploration is ongoing elsewhere in the Empty Quarter, with positive signs coming from Aramco's joint venture with Russia's Lukoil (LKOH.RS), known as Luksar, which has announced some finds during the exploration of parts of the vast desert.
"The question still remains whether they are commercial finds or not. But the signs are encouraging," Al Falih said, adding that Luksar's willingness to spend more money on appraisal indicated the company's optimism.
Falih said he is hopeful that the exploration contracts for the Empty Quarter will be extended but admitted that in the case of Royal Dutch Shell PLC (RDSB) the commercial viability of its finds will depend on the price of oil and how much the oil major can make by selling the condensate that it found in the gas fields.
Saudi Arabia's oil ministry in 2003 awarded four concessions to joint ventures between Aramco and foreign companies to explore the region. So far, the joint ventures have failed to find sufficient volumes of gas to make their exploration commercially viable.
Apart from Lukoil and Shell, China's Sinopec and a team of Italy's Eni (E) and Spain's Repsol (REP), are involved in exploring the Rub Al Khali in partnerships with Aramco.