Specialized Study on Saudi Arabia, the Oil Kingdom of the Middle East

In 2020, real GDP contracted by 4.1%, due to the global decline in oil demand triggered by the COVID-19 pandemic and voluntary cuts in oil production to comply with the OPEC+ agreement. Saudi Arabia’s oil revenues declined between 2018 and 2020, as both average crude oil prices and oil export volumes fell during this period. In 2021, the Kingdom’s net oil export revenue totaled USD 202.166 billion, primarily driven by rising crude oil prices amid post-pandemic demand recovery. Regarding natural gas, Saudi Arabia has experienced steady annual growth. According to the BP Statistical Review of World Energy 2022, Saudi Arabia’s natural gas production stood at 117.287 billion cubic meters per year (i.e., ~321 million cubic meters per day) in 2021, accounting for 2.9% of global output. In 2020, Saudi Arabia consumed approximately 10 quadrillion British thermal units (Btu) of energy, making it the second-largest energy consumer in the Middle East—after Iran—and the 11th-largest globally. That year, petroleum accounted for 62% of the country’s energy consumption, while natural gas accounted for 38%. Since 2015, natural gas supply and processing capacity have increased, while oil production has declined over the same period—leading natural gas to displace a substantial portion of crude oil previously used for power generation. Solar energy and coal contribute minimally to Saudi Arabia’s energy mix. Upstream Development in Saudi Arabia Similar to most OPEC+ members, drilling activity in Saudi Arabia plummeted in 2020 and remained disciplined thereafter—though recent signs point to a marginal shift. As of the week ending November 2, 2022, Saudi Arabia had 81 active drilling rigs—an increase of 21 year-on-year. On the natural gas front, Saudi Arabia’s three major gas fields are all offshore. Non-associated natural gas production rose from zero in 2000 to account for 46% of total gas output in 2020. In 2016, the national oil company Saudi Aramco began prioritizing the development of non-associated gas fields—primarily located offshore. Aramco’s strategy includes developing additional non-associated gas resources, expanding proven gas reserves, and exploring new oil discoveries near existing fields—to help meet surging domestic demand. Saudi Arabia is developing the new Jafurah oil and gas field. At the end of 2021, Saudi Aramco announced plans to develop the Kingdom’s largest unconventional field, Jafurah, estimated to hold 5.66 trillion cubic meters of natural gas. The field lies east of the Ghawar oilfield, near the Persian Gulf. The company expects Jafurah to commence production in 2025. Aramco projects that by 2030, the project’s peak output will reach 57 million cubic meters per day of dry natural gas and 630,000 barrels per day of condensate. This marks a milestone in the company’s efforts to expand its integrated natural gas portfolio and support Saudi Arabia’s goal of generating half its electricity from natural gas and half from renewable energy sources.

Saudi Aramco: Why Is It the 'Uncrowned King' of the Global Energy Industry?

Saudi Aramco is no ordinary oil company—it is a central player shaping the global energy landscape. Through a business model built on resource monopoly, cost dominance, full-value-chain control, and pricing authority, Aramco has erected an almost insurmountable barrier within the global energy industry, earning its title as the true 'Uncrowned King.' Its core competitiveness and developmental logic manifest across the following dimensions: I. A Century of Evolution: From Foreign-Led Exploration to a Petroleum Empire Aramco’s history mirrors Saudi Arabia’s transformation—from a desert kingdom into an energy superpower—and serves as a living textbook of global petroleum industry development. Four distinct phases mark its qualitative leap forward: 1. Incubation Period (1933–1976): U.S.-backed exploration launched the oil era; the discovery of the Dammam field ushered Saudi Arabia into the petroleum age. Though resources were initially controlled by foreign capital, this phase laid critical technical and industrial foundations. 2. Nationalization Period (1976–1999): The Saudi government gradually repurchased shares; in 1988, Saudi Aramco was formally established, achieving 100% state ownership of petroleum resources and cementing its role as the nation’s economic cornerstone. 3. Expansion Period (2000–2018): Global value-chain integration enabled control over world-class fields—including Ghawar and Safaniyah—while driving down upstream costs to just USD 2 per barrel. Aramco thus became the world’s largest oil producer. 4. Transformation Period (2019–2026): Completion of the world’s largest IPO aligned with Saudi Vision 2030, shifting Aramco from a traditional oil company toward a diversified, full-spectrum energy enterprise—with strategic bets on natural gas, digitalization, and new energy. II. Four Core Advantages: Setting the 'Ceiling' for the Global Energy Industry Aramco’s strength stems not from a single competitive edge but from comprehensive, systemic superiority—explaining why it faces virtually no meaningful rivals: 1. Resource Monopoly: Unreplicable Scarcity Aramco controls one-fifth of the world’s proven crude oil reserves (over 260 billion barrels), including the world’s largest onshore field (Ghawar) and largest offshore field (Safaniyah), with production lifespans exceeding a century. Such resource endowment remains unmatched by any other energy firm. 2. Cost Dominance: Unrivaled Cost Efficiency Its crude oil production cost stands at only USD 2 per barrel; natural gas production costs amount to just USD 1 per barrel of oil equivalent—far below the USD 40–60 per barrel average for international oil companies. Even amid sharp oil price declines, Aramco maintains profitability—demonstrating world-leading resilience to market volatility. 3. Full-Value-Chain Control: Layered Profit Enhancement and Reduced Intermediary Losses From upstream exploration and production, through midstream storage and transportation, to downstream refining and petrochemicals, Aramco commands the entire value chain. It further extends into technical services and digital operations—maximizing crude oil’s added value and transcending the limitations of mere 'resource sales.' 4. Pricing Authority: Shaping Global Oil Supply, Demand, and Prices As a core OPEC member, Aramco effectively steers oil production and pricing policy. Its stable daily output of 12 million barrels acts as the 'ballast' of global oil markets—enabling direct influence over price trends via production adjustments (increases or cuts), thereby retaining absolute initiative in market regulation. III. Financial Strength: Unparalleled Profitability and Cash Flow—So Robust It ‘Does Not Need Financing’

Saudi Aramco Working with Evercore on Gas Unit Plans, Bloomberg Reports

1 day ago

Saudi Aramco hired Evercore to advise on restructuring a standalone gas division, potentially leading to a $100 billion listing and expanding its LNG portfolio.

reuters

2026-09-26

Saudi Aramco Working with Evercore on Gas Unit Plans, Bloomberg Reports

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