Saudi Arabia is working to displace over 1 mn bbl / d of oil used across several sectors under Vision 2030’s Liquid Fuel Displacement Program (LFDP), including electricity, desalination, manufacturing, and agriculture. The program is part of the Kingdom’s strategy to free the power sector from oil, with the target of bringing natural gas and renewable energy to account for 50% each in the energy mix by 2030.

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The rationale: Saudi Arabia has relied heavily on crude oil and refined products — like diesel and heavy fuel oil — to keep the lights on for the past decade. The Kingdom burnt an average 589k bbl / d of oil for electricity by February this year, according to Mees data. The figure is the lowest in a decade, and much lower than the 900k bbl / d recorded in the summer of 2015, but it remains substantial.

Every barrel of oil saved domestically is a barrel available for export or for refining into higher-value products. The full target of 1 mn bbl / d displaced will free the kingdom to export those barrels for revenue. With oil prices hovering around USD 65-7 0, that’s about USD 65-70 mn per day of potential additional income, or nearly USD 23.7-25.5 bn a year in additional oil exports, according to our calculations.

AND- The economics favor natgas: Domestic gas was priced at just USD 2-2.5 per MMBtu in April, when Arab Light crude was trading north of USD 70 a barrel, according to RystadEnergy. Gas-fired combined-cycle plants can hit efficiency rates of up to 60%, compared to just 30% for crude-fired units. Natural gas currently fuels around 65% of Saudi Arabia’s electricity generation, while oil makes up roughly 32% — down from roughly half in a decade — and renewables account for just 3% of the mix.

Aramco is now investing heavily in non-associated (standalone) gas fields to supply power plants with cleaner-burning fuel. The flagship project is the USD 100 bn Jafurah shale gas development, the largest unconventional gas initiative outside the US, estimated to hold a whopping 229 tn cubic feet of gas (tcf) of gas. Initial production is expected by 3Q this year, slated to reach full output of 2 bcf/d by around 2030, along with volumes of ethane, natural gas liquids, and condensates. This alone would provide enough gas to displace around 500k bbl / d of oil equivalent at power plants.

On the processing front, Aramco is adding new gas plants and expanding existing ones (like the Hawiyah and Haradh plants), as well as constructing a natural gas liquids fractionation center at Jubail to handle Jafurah’s output. These include combined-cycle gas turbine (CCGT) megaprojects, some of which are independent power producers (IPP) projects being developed by international consortia. The Qurayyah IPP expansion, one of the flagship projects, will see the development of a 3.01 GW CCGT power plant with readiness for carbon capture and a 380 kV electrical substation.

More and more companies pulling the plug on liquid fuel: State-owned Marafiq tapped South Korean energy solutions firm Doosan Enerbility last December to convert its liquid fuel-powered Yanbu 2 plant to run on natural gas. City Cement Company also tapped Aramco earlier this year to convert its facilities, while Tabuk Agricultural Development Company is getting an electrical transmission station for its farm in Tabuk, switching to the main electrical grid.

Expansion of transmission infrastructure is also underway to accommodate the new gas supply. Aramco’s Master Gas System — the nationwide pipeline network that distributes gas — is undergoing a USD 8.8 bn phase three expansion to add 3.15 bcf/d of capacity by 2028. This involves laying about 4k km of new pipelines and building 17 gas compressor stations, ensuring that power plants across the kingdom can receive gas instead of liquid fuel, even in remote areas.

Renewables are another pillar: Renewable power generation more than doubled last year to 11 TWh, according to Mees data. The kingdom is targeting an additional 6.16 GW in 2025, which would bring its total installed renewables capacity to 12.7 GW, boosting generation capacity to 19 TWh annually and rising to 36 TWh once the full capacity comes online by year-end.

Substantial impact: Clean energy helped displace an estimated 51k bbl / d of oil from the energy mix last year, up from under 10k bbl / d in 2023. If the 12.7 GW capacity is installed as planned, renewables could displace as much as 167k bbl / d from the power sector.

The Kingdom is also shifting from old oil-fueled thermal desalination to electric-powered reverse osmosis plants, which use far less energy and can be powered by gas or renewable energy. Acwa Power kicked off operations at the Shuaibah 3 seawater reverse osmosis desalination plant, replacing the decommissioned oil-fired Shuaibah 2 Independent Project– Saudi Arabia’s oldest. The USD 821 mn facility is powered by 65 MW of solar energy and aims to offset the use of 22 mn barrels of oil and 9 mn tons of CO2 annually.

Side benefits: Excess gas capacity and renewables could be leveraged to produce bluehydrogen or green hydrogen, turning former oil-burn into exportable ammonia or other fuels — which Aramco has been eyeing for a while. The integration of carbon capture technology (CCS) also means the Kingdom is heavily cutting emissions further while capitalizing on the offset gases, as many gas plants are built CCS-ready.

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