Page 5 - MEOG Week 37 2021
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MEOG                                         COMMENTARY                                               MEOG



















































                         day following expansion in 2017 and 2018.   has begun preliminary talks with potential
                           The company achieved a single-day gas pro-  investors including large commodity traders as
                         duction record of 10.7 bcf (303 mcm) just over  it looks for funding and tight gas expertise.
                         a year ago.                            However, such a move would need the
                           While there are significant prospects for pro-  approval of the Ministry of Energy (MoE),
                         duction expansion in the Ghawar basin, Jafurah  through which Aramco received its concession
                         is by far the largest unconventional gas asset and  to develop the Kingdom’s oil and gas reserves for
                         despite delays associated with the coronavirus  an initial 40-year period (extendable by a further
                         (COVID-19) pandemic, Aramco remains hope-  60 years). Based on this concession, the compa-
                         ful first production can be achieved in mid-2024,  ny’s reserves total 198.8bn barrels of crude and
                         a few months behind the original schedule.  condensate, 25.2bn barrels of NGL and 191.6 tcf
                                                              (5.43 tcm) of gas.
                         Strategic partners                     Under the original $110bn plans, the com-
                         The strategy of ring-fencing conventional assets  pany intends to kick off production at Jafurah
                         to remain under Aramco’s exclusive control  in early 2024 and achieve 2.2 bcf (62 mcm) per
                         while enlisting outside help with unconventional  day of sales gas by 2036. It is also expected to
                         assets was first highlighted by MEOG in April  produce around 550,000 bpd of NGLs and con-
                         (Aramco’s asset strategy plots a complex path).  densates. The first phase is seen producing 1.1
                           This approach would allow the company to  bcf (31 mcm) per day of raw gas, which will be
                         navigate the tricky political path of maintaining  processed at a facility, the construction of which
                         its role as the sole steward of the Kingdom’s oil  is currently out for tender.
                         sector while gaining assistance from US shale   Being seen as ‘separate’ to Aramco’s core
                         patch experts in developing less politically sen-  crude production, leasing out the development
                         sitive assets and benefitting from significant  of Jafurah may be an easier sell to the compa-
                         knowledge transfer.                  ny’s board and the MoE, though this would cer-
                           Like Oil and Gas, Unconventional Resources  tainly come with strings attached, for example
                         is already a separate division with its own man-  Aramco being the sole offtaker and production
                         agement structure, though it falls within the  levels mandated by Riyadh. However, these are
                         Upstream business line, to which the manage-  unlikely to put off potential partners given the
                         ment reports.                        scarcity of opportunities to take part in the Saudi
                           According to Bloomberg’s sources, Aramco  upstream.™



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