Middle East energy transition – can the Jafurah gas development release all Saudi oil for export?
Updated: May 25
This week various press articles lauded Saudi Aramco’s announcement of the commitment to develop the Jafurah gas field for a mere USD 110bn, which will release some 2Bcf/day and a recoverable reserve of 200 Tcf.
io explores this issue and contends that Saudi Aramco will be able to achieve its goal of removing the burning of oil from the national electricity system and release oil volumes to international markets, while simultaneously achieving most of their Nationally Determined Contribution to reduce greenhouse gas emissions, but only if a step change in gas turbine thermal efficiency is achieved across the Kingdom.
the energy mix has potential to change dramatically
Currently the Kingdom of Saudi Arabia (KSA) generates 348 TWh of electricity consisting of: 222 TWh from gas, 126 TWh from oil and 0.15 TWh from solar.
Figure 1 : KSA Electricity Generation by Source
On average the Kingdom uses 0.4 million bbls per day of crude oil to generate the 126 TWh.
Figure 2: KSA Direct use of Oil for Electricity Generation 2018
Saudi Arabia has had a long-term goal of removing all oil burning from electricity production and move to other resources.
Consider the following:
Current power generation from gas in KSA has an average thermal efficiency of 31%.
Figure 3: Summary of KSA power generation efficiency and installed capacity
In order to replace the oil from electricity production, 126 TWh, would require 1.4 Tcf per year, 3.9 Bcf per day of gas which is 1.8 times the peak production from Jafurah.
Therefore, with current thermal efficiencies, Jafurah cannot displace all the oil from the Kingdom’s electricity system.
In order to release the oil for export, KSA must improve thermal efficiency of gas turbines.
If new Combined-Cycle-Gas-Turbines (CCGTs) are used in the Kingdom, with thermal efficiency of 50%, then only 0.89 Tcf per year (2.4 Bcf per day) would be required. This is very close to the expected production volume from Jafurah.
There are emissions benefits from transitioning to gas and CCGTs.
Direct CO2 emissions in 2017 from the combustion of oil & gas to generate electricity were almost equal:
123 Mt CO2 (gas)
124 Mt CO2 (oil)
Total 247 Mt CO2
The emissions benefits from transition to gas and improving thermal efficiency are vast, including:
Transitioning from oil to gas, with current thermal efficiency, total emissions associated with power generation could be reduced by 21%, a reduction from 247 to 195 Mt CO2. This is a net CO2 reduction of 52 Mt CO2.
Transitioning from oil to gas and with new CCGT power generation for the additional gas fired power generation, total emissions could be reduced by 32%, a reduction from 247 to 168 Mt CO2. This is a net CO2 reduction of 79 Mt CO2.
The Kingdom signed up to a Nationally Determined Contribution (NDC) to CO2 reduction of 130 Mt CO2eq.
As we can see, the development of gas production from the Jafurah field presents a major step in Saudi Aramco and KSA strategy as releasing more oil to market is a potential huge NPV addition as the value of the oil far offsets the cost of installing CCGT. This has the added benefit of achieving a 60% of CO2 emissions of the Kingdom’s NDC target, all while meeting the required electrical capacity to power the economy.
 Assuming the same thermal efficiency