Aramco seeks to invest in foreign natural gas industry by purchasing natural gas fields in Russia and the United States

Russian newspaper “Izvestia” published a special article on Saudi Arabia’s intention to develop its overseas investments within the natural gas industry.

According to the article, as the General Director of the Russian direct investment fund, “Keryl Dmitriev”, that the state-owned Saudi “Aramco” has shown great interest in Russian natural gas production projects.

However, the speculation remains about how Aramco will follow in Russia.

The article went on to discuss options ranging from signing a simple contract to guarantee the purchase of liquefied natural gas or reaching a full partnership agreement.

By looking at Saudis’ ambitions in the natural gas sector, the option to which Saudi Arabia is heading is the second option, because Aramco’s strategy and behind it the Saudi leadership lies in the quest to expand global activity beyond the territories of the Kingdom of Saudi Arabia.

The Kingdom of Saudi Arabia is producing, along with oil, natural gas in quantities that are fully consumed locally, in contrast to the Kingdom’s production of oil, of which large quantities are exported abroad.

Given that domestic natural gas demand which is growing at a rate of 5% annually, Saudi Arabia should at some point seek to import natural gas from abroad to meet the needs of the growing domestic demand.

But the problem is that just doing operations and making simple purchases of natural gas from abroad is not the magic solution that is needed, as this would further entrench Saudi Arabia’s reliance on foreign countries, which at the same time could be affected by the competition in the global market.

Therefore, if the Kingdom invests in joint ventures, it will give them greater autonomy than the dependence on foreign countries to supply the Kingdom with its required natural gas quantities, and in a relatively short time it will provide the Saudis a useful experience to develop their own production and enhance their own reserves.

The Kingdom’s natural gas reserves are estimated at about 8 trillion cubic meters, which is the sixth largest in the world.

With regard to Russia, it is unlikely to deliver natural gas pipelines to Saudi Arabia, and given the improvement of bilateral relations between the two countries recently, entry into private joint ventures of natural gas will be of particular importance.

Russia is a clear potential partner, especially with improved relations, along with the recent positive coordination and the successful interaction between the two countries within OPEC +.

The Kingdom may also turn to the United States and even Australia later on.

All destinations for Saudis will undoubtedly be good, because the countries that they’ll deal with are going to be pleased to get huge amount of money that is accumulated by Aramco and the ruling family in Saudi Arabia.