Natural gas projects to drive non-residential construction in Saudi Arabia

Saudi Arabia’s growing interest in boosting its natural gas capacity will lead to heightened project activity in the segment, driving the non-residential infrastructure growth over the coming years, research firm Fitch Solutions said in a report.

Non-residential construction in Saudi Arabia is expected to expand by an annualized rate of 4.9 percent over the next five years, according to Fitch estimates.

 “Ambitious government targets with respect to boosting natural gas production will continue to be underpinned by the need to move away from burning crude oil to generate power and instead free it for export,” the report said.

It is estimated that the Kingdom possesses natural gas reserves totaling 8.4 billion cubic meters (bcm), placing Saudi Arabia in the fifth place globally, it added.

In the summer months last year, Saudi Arabia utilized 700,000 barrels of crude oil per day to generate power.

With the crude oil prices expected to remain high in the coming years, the government will be looking to replace these volumes with domestic gas and export additional barrels on the open market, Fitch said.

The government has already announced growth targets to develop the country’s natural gas resources as part of its National Transformation Program.

The aim is to boost production to 17.8 billion cubic feet per day, up from 12 billion cubic feet per day in 2017, increasing the share of gas in the power generation mix from half today to 70 percent in 2020, the report said.

Recently, Saudi Arabian Oil Co. (Saudi Aramco) and Turkish firm Tekfen Construction signed a $590 million agreement to construct satellite gas compression plant pipelines for Saudi Arabia’s Haradh Gas Increment Program.

Once the expansion project is complete, the gas plant’s capacity is expected to increase by more than 1 billion standard cubic feet. The project will be completed over a period of 33 months, the report said.

Other projects announced in the segment include:

- Saudi Aramco’s contract to Italy-based Saipem to expand capacity at the Hawiyah gas processing plant by 1.3 billion cubic feet per day, bringing its total capacity to 3.8 bcf/day by 2021.

- Arab Petroleum Investments Corporation’s $54 million facility agreement with Arkad to support the construction of the master gas system package 2.