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Page added on June 7, 2016
Saudi Arabia approves transformation plan, sets 2030 oil, gas targets
Saudi Arabia’s cabinet approved a new economic plan Monday to diversify state revenue in the world’s largest crude oil exporter away from oil by 2030.
It also set oil and gas production-capacity targets for the period.
The National Transformation Program elaborates on the Vision 2030 document released in April as the brainchild of Deputy Crown Prince Mohammed bin Salman, the son of the Saudi monarch, Salman bin Abdul Aziz.
The deputy crown prince has chaired the Council for Economic and Development Affairs since his father’s accession to the throne.
While the 2030 vision document used a relatively broad brush, the NTP provides more detail, outlining Saudi Arabia’s economic diversification agenda, which includes increasing non-oil revenue, reducing the public sector wage bill, slashing subsidies, the establishment of a new sovereign wealth fund, and new taxes.
At the heart of the NTP is an initial public offering of Aramco shares, planned for 2018. Details are still being worked out, but in an interview last week, the new minister of energy, industry and mineral resources, Khalid al-Falih, was confident the move would “unleash” the company’s full capabilities.
“The company will be able to go global in multiple ways. Today we have a lot of investments in downstream. As we prepare the IPO we see a lot of interest in us going into the international upstream and international gas,” he said.
OIL AND GAS TARGETS
The kingdom plans to continue its policy of maintaining crude oil production capacity at 12.5 million b/d until 2020.
It pumped 10.18 million b/d in April, according to the latest Platts OPEC production survey, which would mean the kingdom has maintained about 2.3 million b/d of spare capacity.
Upstream projects such as the expansion of the Shaybah oil and gas field, which is due online within weeks, and Khurais by 2018 will help keep this spare capacity alive.
At the same time, the kingdom plans to increase gas production by nearly 50% to 17.8 Bcf/d, from around 12 Bcf/d currently.
The kingdom also hopes to boost its renewable energy sector, which will meet 4% of domestic power demand by the end of the decade.
There are currently no large-scale renewable projects in the country, which relies on burning gas and up to 900,000 b/d of crude oil and fuel oil for power and water desalination.
Gas currently accounts for 50% of the kingdom’s energy mix, but it now plans to lift this to 70%, Falih said at a news conference in Jeddah to launch the NTP Tuesday.
This could come from local sources or, for the first time, from imports, he said, something Saudi Arabia has been considering since at least 2013.
The high demand growth for gas has been driven, in large part, by the kingdom’s long-term fixed price, with gas for industrial and power use sold until late last year at $0.75/ MMBtu.
The pricing mechanism was finally changed in December in the 2016 budget, as part of a broader program to cut subsidies and reduce the budget deficit. Gas prices were increased to $1.25/MMBtu.
State-owned Saudi Aramco discovered two non-associated gas fields last year — Edmee in the eastern province and Murooj in the kingdom’s Rub al-Khali (Empty Quarter). It is targeting its first gas production from the Red Sea by the end of 2017, with 75 MMcf/d from the Midian field.
In May, Aramco’s latest annual report put Saudi Arabia’s oil reserves at 261.1 billion barrels in 2015, flat from the previous year. It said gas reserves rose last year to 297.6 trillion cubic feet from 294 trillion cubic feet in 2014.
Making further gas discoveries has proved challenging, however, Falih said.
“We have not found deepwater gas, but we may go back once we do more studies,” he said.
15 Comments on "Saudi Arabia approves transformation plan, sets 2030 oil, gas targets"
Survivalist on Tue, 7th Jun 2016 7:28 pm
“… brainchild of Deputy Crown Prince Mohammed bin Salman ….”
Actually it was the brainchild of McKinsey & Co. and Boston Consulting Group that were hired by state officials to come up with plans for the future of the country. MbS just copied and pasted it.
And by “expansion of the Shaybah oil and gas field, which is due online within weeks, and Khurais by 2018 will help keep this spare capacity alive” they mean infill drilling.
Saudi Arabia is peaking/plateauing now. They are throwing everything they have at maintaining the plateau and obfuscating their future plans for production.
When Saudi Arabia is saying that it’s getting away from oil what they are really doing is just making efforts to build a narrative so that when the declines kick in they can explain it as a choice to produce less that is made from a position of strength as opposed to a forced condition that leaves them vulnerable.
Plantagenet on Tue, 7th Jun 2016 7:47 pm
It seems very unlikely to me that KSA can continue to pump 12.5 million bbls/day until 2020. Ghawer is very close t peaking if it hasn’t peaked already. Once GHawar goes into production decline KSA’s overall oil production will drop by millions of bbls per day within a few years.
shortonoil on Tue, 7th Jun 2016 7:52 pm
Sounds just what ISIS has been waiting for; who needs Syria when you can get Saudi Arabia. And if for some reason, like the Russians beating the crap out of them, they don’t do it – there is always Iran waiting in the wings. These guys have about as many friends as a leper. Apparently Saudi Arabia is not banking on the price going up very far for quite a few years:
http://www.thehillsgroup.org/depletion2_022.htm
That is sort of what we have been saying!
Survivalist on Wed, 8th Jun 2016 2:57 am
Here’s the feel good blurb from McKinsey & Co.
http://www.mckinsey.com/global-themes/employment-and-growth/moving-saudi-arabias-economy-beyond-oil
They actually mention tourism! Yeah, that’s right… pack up the wife and kids and go tour Saudi Arabia lol these guys are on shrooms.
Cloud9 on Wed, 8th Jun 2016 7:18 am
Don’t forget the Hajj. Tourism to Saudi Arabia is built into the faith of over a billion people.
makati1 on Wed, 8th Jun 2016 7:34 am
“The Hajj is one of the largest annual gatherings of people in the world … During Hajj, pilgrims join processions of hundreds of thousands of people, who simultaneously converge on Mecca for the week of the Hajj …” WIKI
joe on Wed, 8th Jun 2016 8:51 am
Sadly, hajj is free, you dont pay to get in to the mosques and you are not supposed to consume. Ok theres money in white robes and sandals, but sadly Saudi citizens dont work. They use masses of pakistanis and bangladeshis to do the work and the Saudis said they will INTROCDUCE an income tax on them in the future. Saudi is a basket case economy, much more socialist than Venezuela yet the US give one cluster bombs and ignores 9-11 attacks, the other is evil and must be destroyed. Can you tell me which is which?
They had no evidence at all that Iraq was involved in 9-11, they HAVE some evidence that Saudi was. The US government and people will be condemmed by its own actions. History will be unkind to America after the nuclear floatillas and global bases are distant memories.
Stuifzand on Wed, 8th Jun 2016 9:30 am
“diversify state revenue”
Tourism is unlikely going to be a major source of income for KSA, except perhaps as a niche market for those interested in watching a hand or head chopping session, some flogging or scenic throw-gays-from-high-rise-buildings contests.
“They had no evidence at all that Iraq was involved in 9-11, they HAVE some evidence that Saudi was.”
Why not show this evidence? Why hasn’t there been a single trial in a crime the entire FBI and CIA could have been used to bring the perps to justice? Reason: Iraq and/or KSA didn’t do it, but somebody else, whose identity the US elite desperately wants to conceal:
http://tinyurl.com/jnsgmbe
If Trump will become president the first thing he could do is to use 9/11 to clean up the entire power structure.
Oh wait…
http://tinyurl.com/heytmfy
Bob Owens on Wed, 8th Jun 2016 6:19 pm
SA has tried these great leaps before and all of them have failed. This one will be no different. Imagine depending on tourists in a country that beheads people daily, keeps women as slaves, won’t let them drive, requires head coverings, is hated by ISIS, ruled by Yuppie spawn that flies to London to whore around. Doomed to fail.
HARM on Wed, 8th Jun 2016 7:09 pm
D**n that Stuifzand, he beat me to it!!
“Tourism is unlikely going to be a major source of income for KSA, except perhaps as a niche market for those interested in watching a hand or head chopping session, some flogging or scenic throw-gays-from-high-rise-buildings contests.”
LOL
HARM on Wed, 8th Jun 2016 7:13 pm
The KSA is already the world leader in several non-fossil fuel exports: hate, intolerance, misogyny and brutality. Problem is, there is no practical way to monetize those things (yet). I’m sure the boys on Madison Avenue will get to work on that pronto.
Survivalist on Wed, 8th Jun 2016 7:55 pm
A big uptick in domestic terrorism. I can’t wait for Saudi Arabia to implode. The various clans that make up the House of Saud each had their own territory prior to Ibn Saud conquering them, marrying into them and forming the Kingdom. The Kingdom will fracture along clan lines and the clans will fight each other. I believe that ISIS is supported by clan elements within the House of Saud who feel disenfranchised by the secession plan.
http://www.mcclatchydc.com/news/nation-world/national/national-security/article82634912.html
HARM on Thu, 9th Jun 2016 2:44 am
“The Kingdom will fracture along clan lines and the clans will fight each other.”
Oh… if only the KSA would go full “Game of Thrones” on each other. Could not happen to a nastier bunch of psychopaths and zealots.
Kenz300 on Thu, 9th Jun 2016 7:26 am
Oil producing countries ,as well as, oil producing companies need to transition away from fossil fuels.
Climate Change is real and it will impact all of us…….
Big Oil Could Have Cut CO2 Emissions In 1970s — But Did Nothing
http://www.huffingtonpost.com/entry/big-oil-emissions_us_573c9d81e4b0aee7b8e8a046
Kenz300 on Sat, 11th Jun 2016 7:18 am
Electric cars, bicycles and mass transit are the future…..fossil fuel ICE cars are the past…………..
Think teen agers vs your grand father…………………. cell phones vs land lines…….
NO EMISSIONS……..climate change is real………
Save money……no stopping at gas stations…..no oil changes……..less overall maintenance……