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Gas development in Saudi Arabia assessing the short‐term, demand‐side effects
Author(s) -
Albqami Raja M.,
Mathis F. John
Publication year - 2012
Publication title -
opec energy review
Language(s) - English
Resource type - Journals
eISSN - 1753-0237
pISSN - 1753-0229
DOI - 10.1111/j.1753-0237.2011.00202.x
Subject(s) - diversification (marketing strategy) , economic shortage , medium term , production (economics) , foreign direct investment , investment (military) , supply side , foreign exchange , fossil fuel , order (exchange) , economics , business , demand side , natural resource economics , international economics , finance , engineering , monetary economics , macroeconomics , waste management , marketing , politics , political science , law , linguistics , philosophy , government (linguistics)
This paper analyses the short‐term, demand‐side effects of a large natural gas investment programme currently being implemented in Saudi Arabia using input–output analysis. Saudi Arabia opened gas exploration and production projects to national and international companies in order to attract substantial new investment in the exploration and production of gas non‐associated with oil output. The expected additional gas production is intended for domestic use, thus freeing for export some of the oil that is currently being used to supply domestic energy. Increased oil exports would generate additional foreign exchange income to help fund further diversification of the Saudi economy. The primary outcome of the input–output analysis shows that the strongest positive impact would be realised by the Saudi construction and manufacturing sectors and that a great deal of the equipment needed for increased gas production would have to be imported. A shortage of educated Saudis may curtail success or require use of more foreign skilled expatriates. So far, Saudi Arabia is having significant difficulties finding and expanding the output of non‐associated gas.