Saudi Arabia - Country Commercial Guide
Oil and Gas

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2019-10-13


The Saudi Arabian government (SAG) 2020 budget projection released December 9 plans for total expenditures of about $272 billion before declining to $255 billion in 2022.  Projected revenues for the year are $222 billion, resulting in a $50 billion deficit, or 6.4 percent of GDP.  The government has budgeted for non-oil revenue to reach $85 billion in 2020, about 2 percent greater than 2019’s actual total.  The government is budgeting oil revenue to reach a total of $137 billion in 2020, down 14 percent year-on-year.  If achieved, this will drop oil revenue as a percentage of overall budget revenue to 62 percent, a step toward reducing Saudi’s dependence on oil revenue.  The SAG does not release its oil-price budgeting assumptions but analysts’ estimates calculate an oil-price benchmark ranging from $55-$65.  The budget projects overall revenues to increase to $230 billion in 2022.

Saudi Arabia has the second-largest proven oil reserves in the world (about 266 billion barrels). The Kingdom possesses approximately 18 percent of the world’s proven petroleum reserves and ranks as one the largest exporter of petroleum. 

In 2018, Aramco produced 9.5 million barrels per day of crude oil and 12.4 billion standard cubic feet per day of natural gas. The company exported over 3.8 billion barrels of oil and 446.2 million barrels of natural gas liquids for year ended December 2018.


Saudi Arabia Crude Oil Production and Exports





Crude Oil Production b/d (million)




Crude Oil Exports b/d (million)




Exchange Rate: 1$

 3.75 Saudi Riyal

3.75 Saudi Riyal

3.75 Saudi Riyal

Aramco plans to invest at least $140 billion in oil, gas and petrochemical projects over the next five to six years and went public this year According to Saudi Arabia’s minster of Energy, Industry, and Natural Resources, Khalid Al-Falih, investment will be directed toward new gas and oil plants to meet the growing energy demand, as well as new facilities enabling the continued development of the petrochemical industry. To cope with rising demand, world oil production is likely to increase by a million barrels per day per annum between now and 2030, and  former Minister Al-Falih forecasted in 2018 , daily worldwide production to rise from the current 85 million barrels per day to 105 million by 2030.


Aramco has completed several major projects in its capital improvement program that began in 2012. Presently, Aramco has twelve upstream and downstream investment projects valued at approximately $80 billion to meet increasing global oil demand. By 2020, Aramco’s daily production capacity of 12.5 million b/d is projected to grow to 15 million b/d.

In 2013, Aramco put the finishing touches on major parts of its largest capital program, raising maximum sustainable oil production by 1.7 million bpd. Significant progress was made on the expansion to a production level of 900,000 bpd at Mainfa, an Arabian heavy-crude oil field.

Unassociated gas is also a priority for Aramco because it presently accounts for 44% of the Kingdom’s primary energy consumption. Aramco is targeting a 30 percent increase in sales of gas output to 10 billion cubic feet per day (cf/d). The company has switched its focus to the offshore Karan field, discovered in 2006. Karan, 100 km north of the giant Ghawar oil field, is the Kingdom’s first non-associated offshore gas field to be developed by Aramco. The field has reserves of more than 9 trillion cubic feet of gas. The company produces 2.1 billion cf/d beginning in 2016. Under the Wasit gas development program, Aramco discovered the Arabiyah and Hasbah fields in January 2009. The Wasit gas development program is expected to extract and process up to 2.5 billion cf/d of sour gas from the offshore Arabiyah and Hasbah.

Expanded offshore exploration is also under way. Aramco currently operates at least 16 offshore fields. In its capital investment program for 2012-18, Aramco allocated $8 billion for the development of six offshore facilities out of a total operating budget of $60 billion. With respect to oil and gas engineering, procurement and contracting (EPC) contracts, Aramco has the lead. To qualify to bid for Aramco’s EPC contracts within Saudi Arabia, a company must be certified as an in-Kingdom contractor. This requires signing a joint-venture agreement with a local company and opening an office inside Saudi Arabia.

Leading Sub-Sectors

Armco is increasing its natural gas production to meet domestic needs and is shoring up its evolving chemical industry by providing the essential raw materials. The company also intends to reduce its practice of burning oil for domestic power, thus freeing up more barrels for exports.

Also, in June 2018, Aramco signed a shareholder agreement with National Oilwell Varco, Inc. (NOV) to form a joint venture partnership to establish an integrated, world-class on-shore rig and equipment manufacturing and aftermarket facility in Ras Al-Khair, Saudi Arabia.  In May 2017, Aramco signed agreements with Rowan for the creation of offshore drilling company in-Kingdom and with Nabors for onshore drilling improvisation and optimization. In March 2018, Jacobs Engineering Group signed a deal with Aramco to provide engineering and project management services at the Zuluf field. The company will set up onshore processing facilities to process 500,000 b/d of crude oil produced from the offshore field. 

In November 2017, Aramco awarded $4.5 billion in contracts to several oil and gas service contractors for megaprojects designed to enhance the company’s energy sustainability, diversify the economy, expand gas production, and localize domestic content. 


With the world’s fifth-largest estimated shale gas reserves, there is great potential for Saudi Arabia to replicate North America’s unconventional growth. Aramco’s unconventional program became operational in 2013 and the company has been working with major service companies, including Halliburton and Schlumberger, to develop its reserves. The primary driver is the country’s pressing need to find new supplies of gas to replace the domestically produced crude oil used to generate most of its electric needs, demand that can reach as high as 900,000 b/d in summer. Another major aim is to use unconventional gas to bolster the country’s growing petrochemical industry. To accelerate the effort, the national oil company has so far committed at least $10 billion to its unconventional exploration program and is actively recruiting experienced unconventional experts from North America to join its ranks.

The company’s unconventional ambitions are focused on three different areas in Saudi Arabia. The first is in the northern part of the country. The target formation is called the Qusaibia Hot Shale and is found at a depth between 6,000 to 8,000 feet. The shale is relatively shallow and is the source rock for conventional gas fields in the area. The gas produced from this area will support a major mining project still under construction and a new power plant.

The other two plays are in the eastern province and located along the periphery of the Ghawar oil field, the largest conventional oil field in the world. These two areas will benefit from their proximity to existing infrastructure and the large amount of geological data already collected from the development of Ghawar.

In May 2018, Aramco awarded Halliburton a three-year contract for unconventional gas stimulation services as part of its efforts to unleash a natural gas revolution in Saudi Arabia.  Per the deal, the oilfield services major will provide project management, hydraulic fracturing, and intervention services to meet Aramco’s production targets and improve the economics of its unconventional resources program.  The program mainly covers three regions: Northern Kingdom, South Ghawar and Jafurah Basin.


In November 2017, Aramco and Saudi Basic Industries Corporation (SABIC) signed a memorandum of understanding (MoU) to develop a fully-integrated crude-oil-to-chemicals (COTC) complex in the Kingdom. In a joint venture with state-led petchems firm Sabic, Aramco is developing a COTC plant at Yanbu on the Saudi Red Sea coast that will convert 400,000 b/d of Saudi crude into 9mn t/y of chemicals as well as base oils. The olefins, aromatics and other chemicals output could either be sold directly or upgraded further into higher-value products, while the base oils could be used to manufacture lubricants at Aramco’s Luberef plant at Yanbu. This has output capacity of 550,000 t/y and is being expanded to 1.2mn t/y.

Figures given by Aramco when it launched the project indicated that it expected a conversion rate into chemicals of about 45% of the crude input volume, with the bulk of the rest coming out as base oils. Aramco has since indicated a conversion rate of 50% is intended. Aramco has estimated the project cost at $20 billion and announced a start-up target of 2025. Both seem ambitious: $20 billion was also the cost of Aramco’s 3.22mn t/y Sadara JV with Dow Chemical, which did not require the development of revolutionary technology; and 2025 may be a push as Aramco’s COTC technologies are so far not commercialized. Aramco and Sabic were developing crude-to-chemicals technologies separately before they signed a memorandum of understanding (MoU) in November 2017 to develop the COTC plant under a joint venture. Sabic filed a patent application in the US in October 2013 for a process to convert crude oil into ethylene, propylene and aromatics in a plant comprising currently available refinery process units with a cracker. Sabic’s plan appears to have been shelved.

Aramco appears to be taking the lead on COTC, having signed technology deals without JV partner Sabic. This may have been because Sabic has only signed an MoU for COTC and the deal with the technology firms involves access to proprietary information. Of course, Aramco is also set to buy the 70% of Sabic currently held by sovereign wealth fund PIF. There has been no indication of whether Sabic scientists and engineers will transfer to the COTC project. Aramco and Sabic did sign one joint contract for COTC. In March 2018 the firms awarded a contract to UK’s Wood to provide front-end engineering design (pre-FEED and FEED) and project-management services during the engineering, procurement and construction (EPC) phase. Wood said the contract is expected to continue through to the start of operations, forecast for 2025.

Crude Oil to Chemicals (COTC) Concept

The COTC plant will incorporate two technologies developed by Aramco: the proprietary Thermal Crude to Chemicals (TC2C) process; and the Catalytic Crude to Chemicals (CC2C) process. Aramco has signed deals with technology firms to commercialize both processes. Aramco signed a joint development agreement in February 2018 with U.S. firms CB&I (now McDermott) and Chevron Lummus Global (CLG) to scale up and commercialize TC2C. The COTC plant will combine TC2C with CB&I ethylene cracker and CLG hydro processing technology. This suggests the COTC process will likely comprise three steps: atmospheric and vacuum distillation to separate out the liquid streams; new hydro processing technology to maximize the output of naphtha; and new cracking technology to maximize the output of chemicals. The residual oil from the distillation and residue hydrocracking stages could potentially be used as feedstock for a delayed coker, producing high value petroleum coke that is typically used to make anodes for aluminum production. This is a large and growing business in the GCC.

Aramco also signed joint development agreements in January with French firms Axens and TechnipFMC to “accelerate the development and commercialization” of its CC2C technology. Axens says CC2C has the potential to convert “more than 60%” of a volume of crude into chemicals and is intended to reach commercial readiness by 2021. While commercialization of the COTC technologies is under way, Aramco is continuing work at its Research & Development Center (R&DC) in Dhahran to improve the key technologies and in particular the crude-to-chemicals conversion factors. Aramco says its own proprietary COTC process “was successfully piloted in 2017 and delivered higher chemicals yields than previously achieved” . Aramco’s website says that the research to date has included “tweaking existing proven technologies and processes in an integrated refining complex to raise the chemical production level per barrel of oil from the regular 8-12%, up to 50%.”

While Aramco and Sabic are developing the world’s largest crude-to-chemicals plant it will not be the first. In 2014 ExxonMobil started up a 1mn t/y crude-to-olefins unit at its 592,000 b/d Singapore refinery which “can crack anything from light gases to heavy liquids, including crude oil.”


Aramco is forecast to spend approximately $414 billion over the next 10 years on projects in the areas of material and services to support service facilities, infrastructure, drilling and maintenance [oil], and unconventional resources (both in the exploration phase and development). (Source: MEED)

Aramco’s investment will be directed toward new gas and oil plants to meet growing energy demand and to increase petrochemical production. The National Transformation Program highlights the following initiatives it intends to carry out in this sector over the next five years:

              Increase refining capacity from 2.9 million to 3.3 million barrels of oil per day by 2020;

              Develop high efficiency clean fuel production; and

              Maintain peak oil production at 12.5 million barrels of oil per day.

In its drive to boost local industry and create jobs, Aramco plans to develop an energy industrial city between Al Ahsa and Dammam, which includes manufacturing oil-and-gas equipment and drilling centers for Aramco.

For bidding on Aramco procurement and contracting (EPC) contracts or becoming an Aramco supplier, companies must first go through Aramco’s extensive pre-qualification process.  Bidders should be ready to meet Aramco’s In-Kingdom Total Value Add (IKTV) targets.  IKTV program aims to double Aramco’s domestic spending, from 35 percent of expenditures to 70 percent by 2021.  This program imposes localization requirements that differ by contract and sector. 

Aramco’s planned billions of dollars in expenditures for expansion projects throughout Saudi Arabia will generate continued demand over the next five years for high-quality oil and gas industry related products, supplies, services, and solutions. These include: oil and gas field drilling machinery and equipment; casing, pipes, pipe fitting, and valves; power generation equipment; drilling chemicals; pumps, heat exchangers, gas compressors, and tower coolers; instruments and controls; anti-corrosion systems; laboratory equipment; marine equipment and services; offshore platforms; filtration systems and pressure vessels; storage systems and treatment systems; injection equipment and services; production equipment and services; well-control systems, packing, seals, gaskets, bearings, rope, and wire rope and chain; safety and environmental protection services; pollution- and spill-control services; tools, flexible pipe, valves and actuators; wellhead valves; and thousands of other items related to the oil and gas industry. Aramco and its various Saudi contractors are extremely receptive to U.S. products and services.

Web Resources


Aramco Services Company

Procurement and Logistics Department

Houston, TX

(713) 432-5555,



For more information contact the U.S. Commercial Service in Saudi Arabia at