Saudi Aramco is evaluating its options for managing surplus natural gas produced from the giant Jafurah field, a project that has the potential to reshape the kingdom’s gas industry and alter its role in global energy markets. Since beginning development in 2020, the $100 billion Jafurah project has marked a significant step toward increasing Saudi Arabia’s natural gas output. Phase one commenced production last year, and phase two is expected to be operational by 2030, with Aramco projecting an 80 percent rise in gas production from 2021 through the end of the decade.
Despite Saudi Arabia’s historical focus on oil exports, rising domestic gas demand has so far precluded the nation from exporting natural gas. The kingdom is converting many of its fossil-fuel power plants to gas-fired generation in a bid to free up more oil for export, which is also driving considerable domestic consumption of natural gas. However, industry research estimates that Saudi Arabia’s annual gas production of about 180 billion cubic meters could still leave as much as 50 billion cubic meters per year available for export once domestic needs are met.
The surplus gas has prompted Aramco to consider entering the liquefied natural gas (LNG) export market, potentially competing with regional producers such as the United Arab Emirates and Oman. Plans for an LNG export terminal linked to the Jafurah field’s second phase were proposed in 2023 but subsequently deferred as Riyadh prioritizes meeting its domestic gas requirements first.
To maximize the value of its gas assets and support the kingdom’s broader economic diversification goals, Aramco is reportedly contemplating restructuring its gas business into a separate entity, a move referred to internally as “Project Gamma.” This could eventually lead to a public listing, marking a strategic shift from the company’s recent approach of selling stakes in infrastructure assets to private investors, such as the 49 percent stake sale of its oil pipelines in 2021 and the subsequent lease-and-leaseback transaction involving its gas pipelines.
Aramco is also exploring opportunities to monetize other non-core assets, including real estate, power generation, water resources, and oil storage facilities, as part of an overarching effort to optimize capital deployment. Industry experts note that while Aramco’s crude oil profits have surged amid global price volatility linked to conflicts in the Middle East, the kingdom itself requires capital to fund its ambitious economic transformation plans beyond hydrocarbons, ranging from tourism projects to technology sectors including artificial intelligence.
Nevertheless, some analysts are skeptical about the feasibility of an initial public offering for Aramco’s gas business. The exclusion of the company’s international LNG assets from any potential spinoff, coupled with the lack of immediate plans to build major liquefaction infrastructure, diminishes the rationale for such a move. Additionally, the domestic gas market operates under government-regulated pricing, generating stable but potentially less lucrative returns more suited to existing financial arrangements rather than public listings. Security concerns related to regional tensions also add complexity to any attempt to raise capital through public markets.
Despite these uncertainties, the need to extract greater value from its expanding gas portfolio remains pressing. Aramco aims to sustain oil production capacity and export capacity, accelerate gas production growth, establish a global LNG presence, and support Saudi Arabia’s wider economic and energy objectives. Achieving these goals while managing financial demands amid geopolitical and market volatility presents significant challenges for the state-owned oil giant moving forward.