Aramco awards contracts worth $25bn to boost gas expansion

The contracts relate to the development of the Jafurah gas field and other projects

The contracts aim to support growth of Aramco’s gas production, diversify its portfolio, and add significant volumes of ethane, NGL and condensate. Reuters

Saudi Aramco, the world’s largest oil exporting company, has awarded contracts exceeding $25 billion to advance its strategic gas expansion plan, which aims to increase sales gas production by more than 60 per cent by 2030, compared to 2021 levels.

The contracts pertain to the second phase development of the extensive Jafurah unconventional gasfield, the third phase expansion of Aramco’s Master Gas System, new gas rigs, and the continuous maintenance of capacity, the company said on Sunday.

“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 company's president and chief executive, Amin Nasser, said.

“The scale of our continuing 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.”

The company has awarded 16 contracts, totalling approximately $12.4 billion, for phase two development at Jafurah. The work includes building gas compression facilities, pipelines, expanding the Jafurah Gas Plant with gas processing trains, utilities, sulphur, and export facilities.

Additionally, the project involves constructing the company's new Riyas Natural Gas Liquids (NGL) fractionation facilities in Jubail, which will include NGL fractionation trains, utilities, storage, and export facilities to process NGL from Jafurah.

The company also awarded 15 turnkey contracts worth around $8.8 billion to kick-start the phase three expansion of the Master Gas System. This system delivers natural gas to customers throughout Saudi Arabia.

The expansion, in collaboration with the energy ministry, aims to increase the network's capacity by 3.15 billion standard cubic feet per day by 2028. This will involve installing approximately 4,000km of pipelines and 17 new gas compression trains.

Additionally, $2.4 billion worth of gas rig contracts and $612 million worth of directional drilling contracts have been awarded.

Meanwhile, $1.63 billion in contracts for 13 well tie-in at Jafurah have been awarded between December 2022 and May 2024.

The Jafurah unconventional gasfield is estimated to contain 229 trillion scf of raw gas and 75 billion Stock Tank Barrels of condensate, Aramco said.

Phase one of the Jafurah development programme began in November 2021 and is on track for initial start-up in the third quarter of 2025.

Aramco expects the total investment in the Jafurah project will exceed $100 billion over its life cycle. By 2030, production is expected to reach a sustainable sales gas rate of two billion scf per day along with significant volumes of ethane, NGL, and condensate.

Aramco’s Master Gas System is a vast network of pipelines that links key gas production and processing sites across Saudi Arabia.

Its expansion will enhance access to domestic gas supplies for industrial, utility, and other sectors, offering a cleaner alternative to oil for power generation with lower greenhouse gas emissions, Aramco said.

The energy industry is rapidly moving towards more cleaner forms of energy and environment-friendly solutions as the world transitions to a lower-carbon future and adheres to sustainable development goals.

Saudi Aramco joined the efforts in 2021, pledging to achieve net-zero carbon emissions by 2050, right after Saudi Arabia, the Arab world's biggest economy, said it aimed to neutralise its emissions by 2060.

Oil and gas, however, will continue to be a part of the energy mix "for decades to come and we need to invest in that", Mr Nasser said at that time.