Saudi Arabia's Energy Industry

Saudi Arabia: Dominance and Diversification

Saudi Arabia’s oil and gas industry has lifted the nation into being one of the richest nations in the Middle East. The country holds around 17% of the world’s hydrocarbons reserves and maintains one of the world’s largest oil production capacities, just behind the US. Saudi Arabia also holds the world’s sixth-largest natural gas reserves after Iran, Russia, Qatar, Turkmenistan and the US. The OPEC member’s oil exports account for 70% of the country’s output and support more than half of the government’s revenues. All areas of Saudi Arabia’s oil and gas industry are driven by NOC Saudi Aramco.

While Saudi Arabia has more than 100 different producing fields, eight of them are responsible for the majority of the country’s oil production. Most notable is the Ghawar field, the world’s biggest oilfield, and the Safaniya field, the world’s largest offshore oilfield. Most of Saudi Aramco’s investments go towards maintaining its upstream operations.

Saudi Arabia’s downstream operations have received massive funding as part of the country’s diversification roadmap. The nation now produces base oils, lubricants and chemicals, such as aromatics, olefins, polyolefins, polyols, isocyanates and synthetic rubber. In 2020, Saudi Aramco acquired 70% equity in Saudi Basic Industries Corporation, a local diversified chemicals company with operations in US, Europe, Middle East and Asia, further consolidating its downstream market.

The nation’s target to become carbon neutral by 2060 is being led through heavy financing of renewables developments, including blue and green hydrogen. Investment is backed by Saudi Arabia’s National Development Fund set up in 2017. The country has tremendous solar capacity and aims to harness its potential to have 50% of its power generation coming from green sources by 2030. While developments are underway, the country still relies heavily on hydrocarbons to meet its high energy consumption.