The Shale Project That Can’t Deliver What Saudi Arabia Promises

Core Insights - The Jafurah project, with an investment of US$100 billion, aims to produce 200 million standard cubic feet per day (Mscfd) of gas in Phase 1, increasing to 2 billion standard cubic feet per day (Bscfd) by 2030, which would enhance Aramco's gas output capacity by approximately 60% [1] - Saudi Arabia's strategy to develop its shale resources is driven by energy security, export optimization, and geopolitical positioning, aiming to reduce crude oil consumption for power generation and increase gas exports [2] - The Kingdom's projections regarding oil and gas reserves and production numbers have historically been questioned, with discrepancies noted between claimed reserves and actual production [3][4] Production and Demand - The projected increase in gas output from the Jafurah project is intended to meet rising domestic power demand, which is expected to grow by 3-4% annually, potentially reaching 2.5 times the current level by 2050 [1] - By 2040, global gas demand is anticipated to increase significantly due to factors such as artificial intelligence and data center-related needs, with Saudi Arabia positioning itself as a key player in this market [1] Geopolitical Context - Saudi Arabia's development of the Jafurah basin is seen as a response to the U.S. shale boom, which has altered global energy dynamics and affected OPEC's pricing power [2] - The Kingdom's ambition to become a significant gas exporter by 2030 is tied to its ability to reduce crude oil consumption for power generation, which currently exceeds the projected gas output from Jafurah [6]