Oil and gas industry of Saudi Arabia

By Ritu Tiwari on July 19, 2014
Image by Vectorpocket from Freepik

Saudi Arabia is the world’s largest producer and exporter of proven oil. It has one-fifth of world’s proven oil reserve and is one of the largest producer of crude oil after Russia. Saudi Arabia is also the 5th largest country in natural gas reserve after Russia, Iran, Qatar, and US (Anon 2013). Saudi Aramco dominates the oil and natural gas producer in Saudi Arabiah as achieved the target of 12 million barrels per day, now it is concentrating on production of natural gas, refining, electric power and petrochemical rather than just oil (Hergenröther 2013).

An overview of the oil of Saudi Arabia

Saudi Arabia had 265 billion barrels of proven oil reserve in 2013 (Anon 2013). In 2012 Saudi Arabia produced an average 11.6 million bbl/d of petroleum, 9.8 million bbl/d crude oil and 1.8 million bbl/d of natural gas (Anon 2013). Saudi Arabia is producing three types of crude oil; 60% to 70% light gravity crude oil, 25% medium andheavy crude oil. The world’s largest field of oil is Ghawar, which is having 70 billion barrels ofoil (Hergenröther 2013).Saudi Arabia and Kuwait have 2,230 square mile area between borders which has 5 billion barrels of proven oil reserves (Edward Burton 2009).

Saudi Arabia declined its production at the rate of 6% to 8% in 2006 due to the high consumption rate as it had become the 13th largest consumer of total primary energy.Ministry of petroleum and Mineral resources, maintainedthe declining rate of oil production and now the rate is 2% to 3% per year (Edward Burton 2009). The government had taken many steps to control the rate and to maintain the current capacity level. Saudi Arabia has 7 domestic refineries with acapacity of 2.1 millionbbl/d. Saudi Arabia also started a clean fuel project which has minimum sulphur in diesel.In 2012, Saudi Arabia hadexported 7.5 billion barrels per day. East Asia hadreceived 54% of its petroleum from Saudi Arabia (Anon 2013).

Saudi Arabia exports oil from itsthree primary oil export terminals;RasTanura, Ras-UL-Juaymah and Yanubuterminal(Hergenröther 2013).It also has National shipping company Baheri which has 17 VLCC’s (very large crude carriers) and 22 chemical tankers. Saudi Aramco also has shipping subsidiary VELA International Marine Ltd; it has 15 VLCC and 5 product tankers. In 2012 Baheri and Vela signed a merger of non-binding memorandum of understanding and after that Baheri became the 4th largest owner of VLCC’s globally (Anon 2013).

Natural gas industry of Saudi Arabia

Saudi Arabia is the 5th largest country as a natural gas producer.It had288 trillion cubic feet of natural gas reserve in 2012. 57% reserve at the onshore Ghawar and rest of the reserves at the offshore of Safaniya and Zuluf (Anon 2013). Saudi Arabia does not import and export natural gas, thatmeans Saudi Arabia is using natural gas from domestic production.Saudi Arabia doesnot export natural gas as it has a high cost of exploration, processing and distribution thus production remains limited (Hergenröther 2013). But it is important that the government plans for the production of natural gas because according to the Saudi Aramco report the demand for natural gas will double by 2030 (Hergenröther 2013).

Saudi Arabia is one of the world’s most popular country in terms of oil and gas. In 2006 it was attacked by one of the world’s most notorious terror group Al Qaeda (Edward Burton 2009).This attack created an issue of security for the government . The Government then appointed 20,000 extra guards,where 5000 guards directly appointed by Saudi Aramco for the security of its oil and gas industry (Anon 2013).During this period Saudi Arabia also buildsone of the largestgas plant which willbe completed in mid-2014 (Anon 2013).



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