Save for later Print Download Share LinkedIn Twitter The world's largest oil exporter Saudi Arabia will become a gas exporter soon, Energy Minister Prince Abdulaziz bin Salman declared over the weekend -- indicating that the kingdom may be moving forward its previous 2030 export target. Details are woefully lacking. But an imminent announcement on its detailed export plans is expected given the importance Riyadh attaches to its credibility (WGI Aug.14'19). In oil, the kingdom has a track record of delivering on ambitious project statements. However, the 2030 export timetable was already incredibly bold -- and accelerating it appears to be an overreach. Its timing might be less than ideal as Saudi export ambitions would coincide with a period of oversupply and rock-bottom prices. It is not clear what form Saudi gas exports will take. Originally Riyadh envisaged a focus on pipeline exports. There had been initial discussions on supplying its Gulf neighbors and even talks over three years ago on a line north to Jordan and Egypt. Now the focus has switched to LNG in line with Saudi Aramco's aims to transform itself into a fully integrated international energy company, sources say. In late 2018, Saudi Arabia unveiled a plan to spend $160 billion over the next decade to develop domestic conventional and unconventional gas resources (WGI Dec.19'18). Raw gas production would be almost doubled to 23 billion cubic feet per day and become a 3 Bcf/d exporter by 2030. New gas growth is expected from nonassociated Gulf gas fields, offshore in the Red Sea and from unconventional reserves, notably in the Jafurah Basin. Aramco is only at a very early stage in both developments, expecting around 200 million cubic feet per day in its unconventional projects and the 75 MMcf/d Midyan gas project offshore Red Sea commissioned in 2017. Even for Aramco, scaling up these volumes in a timely fashion appears to be a stretch. A major renewables push that would free up gas for export could also be in the cards, sources say (WGI Sep.4'19). But Saudi Arabia has thus far just commissioned one utility-scale solar project. The cost of its gas is also an issue. Saudi Arabia has huge reserves of ultra-low-cost associated gas. But output levels are capped by crude production and diverting this gas for export would fleece the Saudi economy and its strategic petrochemicals sector of its sole competitive advantage -- cheap feedstock. New Saudi gas production is a lot less cheap. Gas prices have been hiked in anticipation of new nonassociated gas output from $1.25 per million Btu to $3.81-$3.84/MMBtu and the anecdotal evidence is that some fields have been more expensive than this to develop. It is also not known how Saudi gas exports fit in with the kingdom's ambitions to burst into the international LNG trading scene (WGI May29'19). As an LNG latecomer, Aramco would be entering the industry at a time of rapid supply growth and slowing gas demand growth in China. A rush by suppliers to sanction new LNG projects amid a low-priced market risks extending the glut past the mid-2020s. Aramco is nonetheless key to underpin Sempra's US Port Arthur LNG project as a 25% partner and a 5 million ton per year offtaker. It could also be targeting its Asian crude customers and Saudi Arabia's allies in emerging markets, such as Bangladesh and Pakistan, as potential LNG buyers.