Saudi Arabia to Pump First Shale Gas by 2020

Saudi Arabian Oil Co (Saudi Aramco) is seeking to begin producing natural gas from shale rock in the country before the end of the decade as domestic power demand climbs.

"If we can get it by 2020, that will be good," General Manager of Exploration Ebrahim Assa'adan said yesterday. "We are in the reconnaissance phase, shooting regional seismic programmes and drilling all over the country."

At least three to five rigs are being used to evaluate the resources, Assa'adan said. Saudi Aramco, the world's largest crude exporter, had about 100 rigs in operation last year and will employ a similar number in 2012, he said, adding that low gas prices remain a "major issue" in developing the prospects.

Saudi Arabia sells gas locally at a subsidised price of 75 cents a million British thermal units, a third of international market rates.

The country needs to examine the way it regulates tariffs to make unconventional gas extraction attractive, Assa'adan said.

Source: Bloomberg