Saudi Arabia’s state-owned oil company plans to invest $40 billion over the next decade to maintain oil production capacity at 12 million barrels per day, while doubling natural gas output. The Kingdom faces a dilemma with much of its associated gas already being consumed by the oil sector for enhanced recovery, the power generation sector for cooling and the petrochemical industry.

Additionally, the Saudis also burn considerable volumes of oil products and crude oil to generate power, especially during the summer. Half of Saudi Arabian power generation now reportedly comes from oil. With a growing population, the situation is untenable and could impede the country’s oil export business in coming years.

Non-associated gas has proven more technically difficult and thus more expensive to produce. With domestic natural gas prices capped at $0.75 per million Btu, several international oil companies walked away from potential non-associated gas development projects that would not have produced adequate financial returns for them to justify based on the low fixed gas price. This has left Saudi Aramco to do most of the non-associated gas heavy lifting on its own.

Oil and gas discoveries made offshore in the Red Sea are now being targeted to help address the situation, according to Aramco CEO Khalid Al-Falih.

“Although our investments will span the value chain, the bulk will be in upstream, and increasingly from offshore, with the aim of maintaining our maximum sustained oil production capacity at 12 million BOPD, while also doubling our gas production,” Al-Falih said. “This will ensure that we efficiently meet the kingdom’s rising energy demand with gas for power and industry, and refined products for transport, while also meeting the global call on our crude oil.” – As reported by the Society of Petroleum Engineers

A tall order indeed, requiring Aramco to put “its money where its mouth is” the article reports Al-Falih as saying.