Saudi Arabia is building its gas business at home and its LNG business abroad

Is Saudi Arabia building its biggest new gas field to export? Not for now, analysts tell EnterpriseAM: Saudi power plants and industry can absorb most of the new gas. The gas also lets Saudi Arabia sell crude it now burns for power. to be sold abroad: at peak, the program is expected to displace about 500k bbl/d of crude, Aramco has said, Reuters reported.

Gas exports are a later question, and the likelier exit is the Red Sea, outside Hormuz. Saudi Arabia has no LNG export terminal or cross-border gas export pipeline today. A modular terminal at Yanbu could be delivered within three to five years of an investment decision, Kate Dourian, a board member at the Energy Institute’s Middle East branch, tells us.

Jafurah is the supply end of that chain: Aramco began production in December 2025 and is targeting 2 bn cf/d of sales gas by 2030, alongside substantial volumes of ethane and gas liquids, as part of an expansion that could raise its sales gas production capacity by around 80% from 2021 levels. It expects the expansion to add USD 12-15 bn in annual cashflow by 2030.

Domestic demand first

Domestic demand is expected to absorb much of the additional gas: The International Energy Agency (IEA) expects Saudi Arabia’s gas output to expand by almost 40 bcm between 2024 and 2030, while gas-to-power demand is forecast to grow by more than 40% by 2030, according to a 2025 IEA analysis (pdf). The additional gas is expected to support the shift away from oil-fired power generation and feed industrial expansion, and new AI and data center developments will add to electricity demand.

Analysts disagree on how much gas will be left over: Wood Mackenzie estimates Saudi Arabia could eventually have as much as 50 bcm of spare gas a year if production reaches 180 bcm. “This is unlikely to generate a substantial surplus given how much gas is required to displace oil from the power generation sector, and the scale of industrial growth in the Kingdom. Saudi Arabia has a huge demand capacity to absorb extra gas volumes,” Jamie Ingram, managing editor at Middle East Economic Survey (MEES), tells us.

Jafurah alone wouldn’t replace the oil still burned for power: Saudi power plants generated roughly 300 TWh from natural gas in 2025, against about 150 TWh from oil and 20 TWh from renewables, Anne-Sophie Corbeau, global research scholar at Columbia University’s Center on Global Energy Policy, tells us. Even without additional industrial and data center demand, Jafurah’s planned production wouldn’t be enough to replace the remaining oil-fired generation, she says, so Saudi Arabia would need other gas developments alongside renewables to complete the transition.

Crude freed for export

Saudi Arabia is already working to stop burning its exports: Its Liquid Fuel Displacement Program aims to replace more than 1 mn bbl/d of liquid fuels across electricity generation, desalination, manufacturing, and agriculture by 2030, with investment going into gas-fired power plants, fuel conversions, and renewables. Aramco’s expanding gas network is meant to supply customers that used to rely on oil, and every barrel of crude displaced from domestic consumption is potentially available for export.

Power generation is the best first use of the new gas: Combined-cycle gas plants can run at up to 60% efficiency, against about 30% for crude-fired plants, Rystad Energy says, and they supply cheaper electricity to the industries Riyadh is trying to develop. That makes domestic power the most economically attractive immediate use of additional gas, ahead of new LNG export infrastructure, Ingram argues.

Aramco can now produce gas without producing crude, which helped during the conflict. Saudi Arabia historically relied heavily on associated gas produced alongside crude oil, Dourian says. “The development of non-associated gas fields such as Jafurah gives Aramco greater flexibility because gas output is no longer so closely tied to crude production.” That mattered when Saudi Arabia curtailed oil production during the regional conflict. “Non-associated gas production has helped limit the impact on domestic gas supplies,” Dourian adds.

From field to factory

Aramco is spending USD 8.8 bn to move the gas. Phase III of its Master Gas System adds 3.1 bn cf/d of transmission capacity by 2028 through roughly 4k km of pipelines and 17 gas compression trains, meant to carry additional supply to power plants and industrial customers across the Kingdom as Jafurah and other gas developments ramp up.

Contractors are building Jafurah in phases: A Hyundai Engineering-Hyundai E&C consortium has completed the first phase of its gas-processing facilities under a USD 1.6 bn contract and is working on phase two under a USD 2.3 bn award. EPC work for phase four has begun, and contractors have submitted bids for phase five. The Fadhili Gas Plant expansion, another major part of Aramco’s gas program, is scheduled for completion in 2027.

Pipelines and customers have to grow together, Dourian says. Phase III covers much of the transmission capacity the current plan requires, and growth after 2030 could need a fourth expansion alongside additional processing and liquids-handling facilities. The harder part is coordinating upstream development, transmission capacity, and new industrial customers so that gas reaches demand centers as it becomes available. “I would expect midstream capacity and the timing of downstream projects to become increasingly important considerations as production expands, rather than assuming that the availability of gas reserves will be the main constraint,” Dourian says.

Who owns the midstream

Aramco has sold investors a stake in Jafurah’s gas processing and kept control. It closed a USD 11 bn lease-and-leaseback last year. Jafurah Midstream Gas Company holds the development and operating rights to the Jafurah gas plant and the Riyas NGL fractionation facility and leases them back to Aramco for 20 years, with a BlackRock GIP-led consortium holding 49% and Aramco holding 51% and operational control. Aramco also plans to turn its gas business into a standalone division and is weighing a minority listing. The division would cover domestic operations and international LNG, and Bloomberg reported that Evercore is advising on a structure that could value the business above USD 100 bn.

The neighbors’ head start

Aramco is building an LNG business with other countries’ gas before it has substantial domestic volumes to export. It has invested USD 500 mn in MidOcean Energy, signed long-term offtake agreements covering US LNG projects — including 1 mtpa from Commonwealth LNG in Louisiana, with an option to double that volume — and outlined an ambition to market 20 mtpa of LNG globally, with 4.5 mtpa in progress as of January. That experience could eventually support a Saudi export business if domestic production creates a surplus, Ingram says.

Adnoc and QatarEnergy already have the infrastructure and customers Saudi Arabia would need to compete with. Adnoc’s 9.6 mtpa Ruwais LNG project has committed more than 90% of planned capacity under long-term arrangements, with its first trains expected online in 2H 2028. QatarEnergy is targeting 142 mtpa of LNG capacity by 2030 through its North Field expansion, although regional conflict has damaged existing facilities and disrupted the expansion schedule. Saudi Arabia could build an export business, but it would enter a market where neighboring producers already have a head start in liquefaction, customers, and long-term contracts.

Saudi industry can compete with those neighbors before Saudi Arabia exports a cargo. Jafurah is expected to produce 420 mn cf/d of ethane and around 630k b/d of natural gas liquids and condensate by 2030, adding feedstock for petrochemicals and other industries alongside the additional sales gas. Saudi manufacturers get more access to energy and feedstock while Aramco frees up crude for export, which could strengthen their position against UAE and Qatari industries long before the first Saudi LNG cargo.

An exit outside Hormuz

Saudi Arabia would never match Qatar’s scale, but it could offer a route outside Hormuz, Ingram says. “Saudi Arabia would never be an exporter on the scale of Qatar, but what Saudi Arabia could potentially provide would be export capability outside the Strait of Hormuz on the Red Sea,” he says. Rather than matching Qatar’s liquefaction capacity, Saudi Arabia could compete by providing an alternative supply route to European buyers, he adds.

The modular terminal would give Saudi Arabia access to global markets without committing immediately to a large conventional LNG complex, Dourian says. Regional pipelines could require less capital, depending on their routes, but would offer less flexibility in reaching different customers, she adds.

Why this matters: Jafurah’s most immediate export payoff is the crude it frees up, which will put the gas division's international LNG ambitions ahead of its domestic export capacity, even as Aramco builds a business that could be valued above USD 100 bn.