Crude burn – the direct use of crude oil in power plants and industrial facilities, primarily for electricity generation – has long been a staple in Saudi Arabia’s energy mix. The kingdom burns significant volumes of oil to meet domestic electricity demand, which hovers around 171 terawatt-hours (TWh). However, analysis from Rystad Energy shows the upcoming Jafurah shale gas field, set to start production in 2025 and the largest of its kind globally, could dramatically shift this dynamic.
By tapping into unconventional gas, Saudi Arabia stands to displace up to 350 000 bpd of crude burn by 2030. The increased gas supply would not only curb domestic crude use but also free up more oil and refined products for export, strengthening the country’s position in global energy markets.
The Jafurah project is a key component of Saudi Arabia’s Vision 2030, which seeks to boost gas production by 60% from 2021 levels while diversifying the nation’s energy mix. Utilising more efficient natural gas and renewable energy in power generation will also enable Saudi Arabia to reduce its dependence on crude oil. Planned to unfold in three phases, the project will see more than US$100 billion in investment in the next decade, positioning Saudi Arabia as the world’s third-largest shale gas producer.
Strategically located near Aramco’s Uthmaniyah gas-processing plant, Jafurah benefits from logistical efficiencies, as its proximity reduces the need for costly long-distance pipelines. Uthmaniyah’s established infrastructure and expertise will be crucial in processing Jafurah’s output, including the separation of natural gas liquids (NGL), ethane, condensate and other byproducts, optimising the field’s commercial value.
“Saudi Arabia is stepping up investment in natural gas as a cleaner, lower-carbon alternative to oil and coal. This strategic pivot, alongside the OPEC+ decision to cap Aramco’s oil production at 12 million bpd by 2027, is designed to support price stability while increasing domestic gas consumption. Output is projected to climb to 13 billion ft3/d by 2030, setting the stage for a major expansion in gas supply. This will allow the nation to redirect more crude for export, reinforcing its influence in the global energy landscape. As the initiative advances, the success of this shift will depend on robust midstream infrastructure, downstream integration and deeper-zone drilling campaigns,” says Pankaj Srivastava, Senior Vice President, Commodities Markets – Oil.
As the Jafurah gas field approaches maturity, it is expected to offset crude burn by 35 000 bpd in 2025, gradually increasing to 350 000 barrels by 2030, freeing up volumes that would otherwise be used in power generation. This shift comes at a critical time, as oil product demand in Saudi Arabia is projected to rise by approximately 100 000 bpd between now and 2030, largely driven by increasing consumption of gasoline and diesel. However, domestic demand is not expected to be the key driver of Saudi crude growth in the coming years. Instead, the kingdom will likely pivot toward maximising crude and refined product exports, aligning its strategy with evolving market dynamics and price expectations.
On the domestic front, the economics of fuel switching continue to favour gas over crude for power generation. Domestic natural gas is priced at roughly US$2 to US$2.5 per million British thermal units and Arab Light crude currently trades at above US$70/bbl. Because of these favourable economics, gas-fired plants – especially high-efficiency combined-cycle units – can now operate at up to 60% efficiency, compared to around 30% for crude-fired systems. This results in operational costs that are six to eight times lower per kilowatt-hour. These cost advantages underpin Saudi Arabia’s strategy to replace crude with gas in its power mix, enabling the kingdom to redirect more crude toward export markets and strengthen fiscal returns.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/23042025/rystad-energy-saudi-arabia-slashes-crude-burn-taps-gas-for-power-generation-by-2030/