Saudi Arabia's ambitious shale project, centered around the Jafurah basin, is a bold move with far-reaching implications. However, beneath the surface, there are critical questions and controversies that demand our attention.
The Promise of Jafurah: A Geopolitical Game Changer?
Saudi Arabia's motivation for developing its shale resources is a strategic blend of energy security, export optimization, and geopolitical positioning. The kingdom aims to reduce its reliance on crude oil for power generation, free up more barrels for export during a period of tight OPEC+ management, and secure feedstock for its expanding petrochemical and industrial sectors. With Jafurah boasting one of the world's largest unconventional gas reserves, Saudi Arabia presents it as the linchpin of a new era of domestic supply growth and future export potential.
But here's where it gets controversial: the numbers don't always add up.
The Jafurah project, estimated to cost US$100 billion, is expected to produce 200 million standard cubic feet per day (Mscfd) of gas in Phase 1, with production rising to 2 billion standard cubic feet per day (Bscfd) by 2030. This would represent a significant increase in Aramco's gas output capacity, with the ultimate goal of boosting gas output by 80% by 2030.
However, the reality may not match the projections. Saudi Arabia's influence on the global stage is largely dependent on its oil and gas reserves and production numbers. Consequently, there is a strong incentive to present these figures in the most favorable light.
For instance, in 1989, Saudi Arabia claimed proven oil reserves of 170 billion barrels. A year later, without any major new discoveries, the official estimate jumped to 257 billion barrels, an increase of 51.2%. This trend continued, with reserves increasing to over 266 billion barrels, and then to 268.5 billion barrels in 2017. During this period, the country was extracting an average of 8.162 million bpd. From 1990 to 2017, Saudi Arabia physically removed an average of 2.979 billion barrels of crude oil every year, yet its official reserves increased by 98.5 billion barrels during the same period.
Similarly, Saudi Arabia's stated production numbers and spare capacity claims are questionable. After the attacks on the Abqaiq and Khurais facilities in 2019, Energy Minister Prince Abdulaziz bin Salman announced plans to restore production capacity to 11 million bpd by the end of September and recover full capacity of 12 million bpd two months later. However, these figures were not accurate. Saudi Arabia's average crude oil production from 1973 to 2019 was 8.151 million bpd, and it had never produced anywhere near 12 million bpd.
The Energy Information Administration (EIA) defines spare capacity as the volume of production that can be brought on within 30 days and sustained for at least 90 days. After the 2019 attacks, it became evident that Saudi Arabia had expanded its definition of spare capacity to include crude held in storage, crude it could purchase from elsewhere, and crude it could withhold from contracts and redirect into storage.
This pattern of strategic exaggeration seems to extend to the Jafurah project as well. In early 2024, an additional 15 Tscf of gas deposits were declared proven, bringing the official total to 229 Tscf. Even if this is accurate, it remains to be seen if this is sufficient to reduce crude burn to the levels forecast by the Saudis and allow the kingdom to become a significant gas exporter by 2030.
EIA data shows that Saudi Arabia burned well over 500,000 bpd of crude oil in the second half of 2024, and industry estimates suggest it burned about 470,000 bpd in 2025. Jafurah's targeted production of 2 billion standard cubic feet per day by 2030 equates to 0.3340 million barrels of oil equivalent, or 334,000 barrels. This means the projected new amount of gas from Jafurah by 2030 is around 334,000 bpd, which is not enough to cover the current amount of crude being burned for power generation, let alone any increase in demand between now and 2030.
So, while Saudi Arabia's shale project promises a new era of energy security and export potential, the numbers tell a different story. It raises questions about the reliability of Saudi Arabia's projections and the true extent of its energy resources.
What are your thoughts on this matter? Do you think Saudi Arabia's shale project can deliver on its promises, or is it a case of overinflated expectations? Feel free to share your insights and engage in the discussion in the comments below!
