State-owned Saudi Aramco is planning its first deepwater wells, as part of a seven-well offshore Red Sea exploration program, company CEO, Khalid al-Falih was reported as saying on 31 December. Two wells, one offshore from the town of Duba and a second, the Harid well (the latter in shallow waters) northwest of Duba, are currently being drilled, according to Saudi Oil Minister, Ali Naimi. “The [Red Sea] region of Tabuk, including the offshore, shows strong indications of commercial quantities of oil and gas,” Mr Naimi told the official Saudi Press Agency on 6 January. But he warned: “the exploration and development of oil and gas take a long time.” The Red Sea is a new area of focus for Aramco as part of its gas-led exploration drive out of its traditional Eastern Province heartland. Aramco has boosted gas reserves for at least 12 straight years from 1999 to 2011. And raw gas production has risen for all but one of those years (MEES, 4 June 2012). Nevertheless, a gas shortage looms for the Kingdom, with liquids burning for power generation on the increase amid booming demand for power and petrochemical feedstock (MEES, 14 December 2012).

Aramco discovered an offshore Red Sea field last year and its current major gas increments – the just completed 1.8bn cfd Karan development, and the 1.3bn cfd Hasbah and 1.2bn cfd ‘Arabiya projects both due on stream in 2014 – are all non-associated offshore gas fields. By contrast, exploration onshore in the Empty Quarter has proved largely disappointing. Aramco’s next onshore gas increment, the 75mn cfd Midyan field, is of considerably more modest proportions. The shift offshore and to non-associated gas development will exponentially increase production costs and ratchet up the pressure to introduce a new internal Saudi gas price. (CONTINUED - 284 WORDS)