Saudi Arabia is a big name in the oil and gas business. It has a super important role globally, because it makes a lot of the world’s crude oil and natural gas. In this write-up, we’ll get an in-depth look at the current situation of oil and gas business in the area.
The oil and gas business in Saudi Arabia goes way back to the 1930s when they found oil. Today, it’s a superstar in the global energy market, thanks to its huge oil reserves and production.
The Now of Oil and Gas Business there By 2024, Saudi Arabia is sitting pretty as the biggest oil producer in OPEC. It’s also one of the top oil producers in the world, next to the US and Russia. Saudi Arabia can make around 12 million oil barrels per day. However, the actual number shifts according to what the world wants and what OPEC agrees on. In 2023, Saudi Arabia exported around 7.5 million barrels every day. This brought in a ton of money for the country. Besides oil, the natural gas business is also doing well. Its production is around 120 billion cubic meters per year.
Saudi Arabia is actively pushing beyond its oil-based economy. This change, led by Crown Prince Mohammed bin Salman, is encompassed in the Vision 2030 initiative. A key part of the plan is investing in renewable energy. By 2023, Saudi Arabia kicked off numerous green energy projects, such as the Al-Dibdibah Solar Power Plant. Its goal? To produce 3 gigawatts of electricity by 2026. The kingdom is also backing wind energy – the Dumat Al-Jandal wind farm is set to provide 400 megawatts.
Tech is playing a huge role in Saudi Arabia’s oil and gas sector. Through advanced data analytics, automation, and AI, Saudi Aramco is enhancing productivity and cutting costs via digital oil fields. By 2024, Saudi Aramco deployed over 500 drones to collect and analyze data across its facilities in real-time. Saudi Aramco is putting an emphasis on protecting the environment.
Several initiatives are under way to lessen its carbon footprint. In 2023, a major carbon capture and storage project kicked off, targeting the capture of 5 million tons of CO2 annually by 2027. Saudi Arabia also sees a future in hydrogen energy. The kingdom is geared towards leading the global hydrogen scene, aiming to produce 4 million tons of green hydrogen per year by 2030.
{Note: The oil and gas business add up to about half of Saudi Arabia’s GDP. It also contributes 70% to the export earnings. Plus, a lot of people work in it. In 2024, the oil and gas business directly employs about 200,000 people with many more indirectly linked.}
Challenge: Oil costs change drastically due to many different reasons – country disagreements, market forces, natural disasters and changes in economy. For a country dependent on oil revenue like Saudi Arabia, this volatility poses a challenge. Oil price spikes can be caused by political unease in oil-rich areas disrupting supply. A global economic slump, on the other hand, can slump oil demand and drop prices.
Opportunity: An opportunity for Saudi Arabia lies in creating a financial safety net during high oil price periods. This reserve protects them when oil prices are low. Strategic use of hedging and futures contracts can also help stabilize their revenue. Funds like the Public Investment Fund (PIF) offer a safeguard against market changes.
Challenge: Being reliant on oil revenue can be risky for Saudi Arabia’s economy. Its vulnerability increases with the worldwide shift toward renewables and sustainability, and limits growth in other sectors.
Opportunity: Vision 2030 provides a diversification plan for Saudi Arabia. Its focus extends to non-oil sectors – tourism, entertainment, healthcare, and technology – to generate income and lessen oil dependency. The plan includes the $500 billion NEOM megacity, envisioned as an innovation hub. Additionally, it involves increasing mining, developing robust finance services, and boosting small to midsize businesses.
Challenge: As the world increasingly focuses on sustainability and less carbon emissions, all oil economies face challenges. The industry is a major greenhouse gas emitter and is facing strong demands to adopt carbon-friendly means. Non-compliance can lead to penalties, and an affected image and market reach.
Opportunity: Saudi Arabia could lead the way in sustainable oil and gas practices. Efforts like carbon capture and storage (CCS) and hydrogen production investment are significant ways to reduce the industry’s ecological impacts. By 2030, Saudi Arabia wants to produce 4 million tons of green hydrogen. Additionally, increasing renewable energy projects like the Al-Dibdibah Solar Power Plant and Dumat Al-Jandal wind farm evidence the country’s commitment to diversification and a smaller carbon footprint.
Challenge: The constant tech evolution calls on the oil and gas industry to rethink and innovate procedures. Key to this transformation are digital technologies like IoT, AI and automation, which require substantial training and investment.
Opportunity: Technological innovation could be beneficial to Saudi Arabia’s oil and gas industry. High tech oil fields, for instance, can optimize production and maintenance by using advanced data analysis and AI to save costs. For example, drones equipped with sensors and AI can improve facility monitoring and safety, as evidenced by Saudi Aramco’s investment in over 500 such drones. Also, blockchain technology can enhance supply chain transparency and security.
Also Read: Oil and Gas Career KSA: Your Pathway to a Thriving Future
The future of the oil and gas industry in Saudi Arabia is closely tied to the global energy transition. While fossil fuels will remain a key part of the energy mix for the foreseeable future, the kingdom is proactively preparing for a post-oil era.
Saudi Arabia’s strategic investments in renewable energy, technological innovation, and sustainability initiatives position it as a leader in the global energy market. The Vision 2030 initiative provides a clear roadmap for economic diversification and sustainable growth.
Also Read: Latest Oil and Gas Jobs KSA: Your Ultimate Guide
In this changing scenario, The GET Global Group is a key player in the oil and gas business in Saudi Arabia. It focuses on innovation, sustainability, and top-notch work to propel the industry forward. The GET Global Group offers a range of services. Their know-how and commitment to quality makes them a top pick for companies in Saudi Arabia. For more details on how The GET Global Group can help your business in the oil and gas industry, check out our website.
