Saudi Aramco is looking for natural gas assets from Russia to East Africa and the US as the kingdom’s state-owned energy giant hunts for ways to meet soaring domestic demand.
The comments by Khalid al-Falih, who’s both Aramco chairman and Saudi energy minister, are a tacit admission Aramco has failed to find enough domestic gas reserves despite years of exploration. He’s now considering imports of super-cooled liquefied natural gas to bridge the gap with local consumption and cut the amount of crude oil burned in power stations instead of exported for profit.
“Aramco is drawing a very wide net,” said al-Falih, mentioning the Mediterranean and the Caspian Sea as other potential targets for gas assets.
Saudi Arabia diverts tens of millions of barrels of crude every year into its electricity generation plants, particularly during the peak air-conditioning season in the summer. It doesn’t produce enough gas to supply its power stations. Most the gas it does pump goes to its fast-growing petrochemicals industry.
Al-Falih wouldn’t rule out buying LNG from Russia, which this month opened a new plant in the Arctic, although he cautioned it wasn’t the most economical option at the moment.
“The question of Russian gas, and being able to export around the world, including potentially to Saudi Arabia, is an intriguing question that it would not exclude,” he told Bloomberg Television in an interview in Riyadh after the kingdom presented its 2018 budget.
“Is it our lowest hanging fruit?” he said. “The answer today is not. But I think we are in an interesting moment to talk about the potential to buy LNG from the Russian Arctic.”
Al-Falih also said that Aramco has looked at the potential to expand its footprint in the US through its subsidiary Motiva – the largest refinery in the country – possibly through investing in petrochemical production.
“They are looking for potential integration there if it makes economic sense,” he said about Aramco’s plans in America.
A picture taken on June 23, 2008 shows a flame from a Saudi Aramco oil installation in the desert near the oil-rich area of Khouris, 160km east of the Saudi capital Riyadh. The comments by Khalid al-Falih, who’s both Aramco chairman and Saudi energy minister, are a tacit admission Aramco has failed to find enough domestic gas reserves despite years of exploration.
