Natural Gas in the Saudi Financial Market: Comprehensive Analysis and Recent

Natural gas is a mixture of hydrocarbon gases, primarily composed of methane with smaller amounts of ethane, propane, and butane. It is extracted from geological formations underground, either alone or associated with crude oil in oil fields. Natural gas is relatively cleaner fuel compared to oil and coal, producing lower carbon dioxide emissions, making it a preferred choice for the transition to sustainable energy. In Saudi Arabia, natural gas is viewed as one of the important pillars for achieving the goals of Vision 2030, particularly in reducing reliance on oil as a primary source of revenue and stimulating the growth of manufacturing and petrochemical industries. Gas consumption in Saudi Arabia is concentrated in two main sectors: electricity generation and water desalination, and the petrochemical industry, where companies like SABIC and its subsidiaries use gas as a primary raw material. The gas infrastructure in the Kingdom is advanced and includes an extensive pipeline network, processing and pumping stations, and distribution facilities covering most industrial and urban areas. Financially, there is no separate stock representing natural gas in the Saudi stock market, but it is integrated into the operations of major energy companies, led by Saudi Aramco. The performance of the gas sector is one of the main influences on the profitability and market value of these companies, thus reflecting on the stock market indicators as a whole. Additionally, local gas pricing has gradually been moving towards liberalization to reflect the true cost of production and stimulate investments, enhancing the sector's attractiveness to local and international investors. In terms of projects, efforts to exploit unconventional reserves such as the Jafurah field exemplify the government's direction to maximize the benefits from gas resources, reflecting positively on the national economy and stimulating the development of new sectors. Ultimately, natural gas represents a strategic resource that combines technical and economic importance, managed within an integrated system to achieve energy security and sustainable development.

Saudi Arabia witnessed significant developments in the natural gas sector in 2024 and 2025, driven by massive projects and strategic investments. The Jafurah shale gas project stands out as the most significant achievement in this field, being the largest shale gas project in the Kingdom's history, with investments nearing $100 billion. The Ministry of Finance announced in December 2025 the commencement of production from the first phase with a capacity of 450 million standard cubic feet per day, with plans to raise production to 2 billion cubic feet per day by 2030. This development represents an increase of about 60% in production capacity compared to previous levels, positioning Saudi Arabia among the largest producers of unconventional gas globally. In terms of financing, Aramco executed financing deals worth $11 billion in 2025 through the sale and leaseback of gas facilities, with participation from global investors such as BlackRock and Global Infrastructure Partners, reflecting international investors' confidence in the Saudi sector. The total gas production in the Kingdom by the end of 2025 exceeded 12 billion cubic feet per day from all fields, with plans to meet the increasing industrial and electrical demand, especially with the trend towards reducing reliance on oil for electricity generation. Pricing-wise, Saudi Arabia still relies on government pricing for local gas contracts, but there is a gradual trend towards linking prices to part of global prices, enhancing the attractiveness of investment in the sector. In terms of infrastructure, major projects such as the Gulf Pipeline and the expansion of pumping stations have been launched, alongside updates to distribution networks in industrial cities. These figures reflect the strategic direction to enhance the role of natural gas in the Saudi economy and confirm that ongoing investments will contribute to elevating the Kingdom's status as a key player in the global gas market, providing a strong foundation for energy transition and industrial development.

The Saudi financial market does not have a company specialized solely in natural gas; rather, gas activities are integrated into the operations of major energy companies, led by Saudi Aramco (2222), which is the largest globally in terms of market value. Aramco plays a key role in developing massive gas projects, such as the Jafurah field, making it the main channel for indirect investment in the gas sector. The prices of Aramco's shares are influenced by developments in the energy sector as a whole, where gas revenues constitute an important part of the company's profits and annual distributions, which amount to about 75% of profits. Alongside Aramco, petrochemical companies such as SABIC (2010), PetroRabigh (2380), and refining rely on gas as a primary raw material in their production processes, making the performance of these companies linked to developments in the local gas market. Financially, Saudi energy companies enjoy relatively moderate price-to-earnings ratios, supported by stable revenues and supportive government policies. Financial data for 2024 showed that Aramco maintained a market value exceeding several trillion Saudi riyals, with substantial annual profits and attractive distributions for shareholders. Projects like Jafurah have also contributed to increasing the company's assets and enhancing its ability to achieve sustainable profit growth. Petrochemical companies are considered key indicators of industrial gas needs and play an important role in guiding pricing and local consumption policies. In terms of infrastructure, companies like the Saudi Electricity Company (5110) heavily rely on gas for electricity generation, reflecting the close interconnection between various economic sectors. Overall, the performance of companies listed in the energy sector reflects the success of the Saudi strategy in exploiting natural gas resources and achieving a balance between economic growth and financial sustainability.

The natural gas sector in Saudi Arabia is part of a competitive global landscape, where regional and international interests intersect in exploration, production, and export. Regionally, Qatar stands out as the largest exporter of liquefied natural gas (LNG) globally, thanks to its vast reserves and advanced liquefaction facilities, while Saudi Arabia seeks to narrow the gap by developing massive fields like Jafurah and investing in infrastructure. Meanwhile, the UAE and Kuwait also rely on gas to support their industries, with an increasing trend towards importing gas via pipelines or LNG. Internationally, the United States leads the list of gas producers due to the shale revolution, playing a pivotal role in global LNG markets, especially with rising demand from Europe and Asia. Russia represents a key player in supplying Europe with gas via pipelines, despite geopolitical challenges affecting market stability. Saudi Arabia faces challenges in competing with these powers, particularly with the high costs of extracting unconventional gas and the need to develop modern technologies to enhance efficiency and reduce emissions. Locally, Aramco monopolizes the exploration and production sector, with strong support from the Ministry of Energy and partnership initiatives with international investors. Competition also emerges in the renewable energy sector, where the Kingdom is investing heavily in solar and wind energy projects under Vision 2030, creating a balance between developing the gas sector and transitioning to clean energy sources. In marketing terms, Saudi Arabia relies on long-term contracts and government pricing for local gas, while gradually seeking to increase transparency and open the door for exports and international partnerships. Overall, the Saudi gas sector enjoys competitive advantages stemming from vast reserves and government support, but it faces challenges related to cost, technology, and global competition, requiring a balanced strategy to achieve sustainable growth and enhance the Kingdom's position in the global energy market.

The Jafurah shale gas project is considered the cornerstone of the Kingdom of Saudi Arabia's strategy to enhance its position in the global gas market. The Jafurah field spans over 17,000 square kilometers in the Eastern Province, with an estimated reserve of about 229 trillion cubic feet of gas, making it one of the largest unconventional fields in the world. The project was announced in 2020 as part of Vision 2030, with the government allocating massive investments estimated at around $100 billion to develop infrastructure, extraction technologies, and processing plants. In December 2025, the Ministry of Finance announced the start of production from the first phase with a capacity of 450 million cubic feet per day, with plans to gradually increase production to 2 billion cubic feet per day by 2030. This development is expected to cover a significant portion of the increasing domestic demand for gas and reduce reliance on oil for electricity generation and heavy industries. The project is distinguished by adopting advanced techniques in hydraulic fracturing, allowing for efficient extraction of gas from shale formations. The project also includes the establishment of a massive pipeline network and modern processing plants to ensure the transportation of gas to industrial and electrical markets. Economically, Jafurah enhances Saudi Arabia's ability to attract foreign investments, especially with joint financing deals with international investment funds. The project is expected to create thousands of direct and indirect jobs and develop manufacturing industries related to gas. Environmentally, the project includes programs to reduce emissions and manage wastewater in extraction operations, aligning with global trends towards clean energy. Ultimately, the Jafurah project represents a model of innovation and integration between government policies and international partnerships, reflecting Saudi ambition in transitioning towards a diversified and sustainable economy based on optimal resource exploitation.

In recent years, the Saudi government has adopted a series of policies and strategies to enhance natural gas production and expand its use in the national economy. This comes under Vision 2030, which aims to diversify energy sources and reduce reliance on oil as a primary source of income. Among the most prominent of these strategies is the intensive investment in developing unconventional fields like Jafurah, expanding the pipeline network and processing stations to ensure gas reaches various industrial and service sectors. The government has also launched initiatives to gradually liberalize gas prices, reflecting the true cost of production and providing incentives for investment in new projects. In this context, industrial gas pricing policies have been updated, contributing to the economic feasibility of petrochemical and heavy industry projects that rely on gas as a raw material. In terms of infrastructure, the state has invested in major projects such as the Gulf Pipeline, which connects the Kingdom with other Gulf countries, in addition to updating distribution networks in major cities and industrial areas. The government has also encouraged partnerships with international investors through joint financing deals and agreements for the sale and leaseback of assets, contributing to attracting global capital and technical expertise. In the environmental field, programs have been launched to reduce gas flaring and develop carbon capture technologies, aiming to reduce emissions and improve resource utilization efficiency. Experimental projects are also underway to produce green hydrogen using natural gas as an intermediary source, enhancing the Kingdom's position in the clean energy market. Overall, these strategies reflect the Saudi government's commitment to achieving energy security, supporting industrial development, and enhancing environmental sustainability while maintaining the sector's attractiveness to local and international investors.

The performance of the Saudi stock market is closely linked to developments in the natural gas sector, particularly through its impact on major listed companies such as Saudi Aramco and SABIC. The energy sector, which combines oil and gas, constitutes a large percentage of the market value of the TASI index, with Aramco alone holding a massive share of the total market capitalization. Major gas projects like Jafurah directly affect Aramco's financial results, contributing to increased assets and future revenues, which positively reflects on the company's ability to distribute dividends and achieve sustainable growth in market value. Financially, Saudi energy companies exhibit moderate price-to-earnings ratios, supported by stable revenues and government policies that support gas price liberalization and investment enhancement. Petrochemical companies also benefit from the abundance of gas and its competitive prices, supporting profit margins and enhancing competitiveness in global markets. In terms of liquidity and trading volume, the energy sector sees interest from local and international investors, especially with the expansion of partnerships and financing deals in gas projects. On the other hand, fluctuations in global gas prices affect investor sentiment and stock valuations, although the Saudi market does not yet rely on spot pricing or a dedicated gas exchange. Overall, natural gas represents an important driver for the performance of the Saudi stock market, reflecting the success of the national strategy in exploiting natural resources and enhancing growth across various industrial sectors. With the continued development of gas projects and infrastructure, the sector is expected to continue its impact in supporting the stability and profitability of the Saudi financial market.

Natural gas infrastructure projects in Saudi Arabia are a fundamental element in achieving the strategic goals of the energy sector. These projects include the development of an extensive network of pipelines connecting production fields to processing and distribution stations, as well as gas pumping and liquefaction stations to meet the needs of industrial and residential sectors. Among the recently completed projects is the Gulf Pipeline, which connects Saudi Arabia with other Gulf countries, enhancing regional energy integration and providing flexible options for exporting and importing gas as needed. Processing stations in Jubail and Rabigh have also been updated and expanded to keep pace with increased production from conventional and unconventional fields like Jafurah. These stations incorporate modern technologies for gas processing and hydrocarbon component separation, improving production efficiency and reducing waste. In terms of distribution, the state has invested in updating gas networks within major cities and industrial areas, focusing on securing supplies for factories and power generation stations. Projects are also underway to expand storage capacities and strategic reserves to ensure supply continuity in emergencies or seasonal demand increases. Additionally, Aramco has launched experimental projects to utilize carbon capture technologies and convert gas into value-added products, such as blue hydrogen. These projects reflect the Kingdom's commitment to developing advanced infrastructure that supports industrial growth and achieves energy security while considering environmental standards and operational efficiency. Overall, gas infrastructure projects represent a cornerstone in Saudi Arabia's strategy to achieve sustainable development and enhance its position as a regional and global energy hub.

The pricing of natural gas in the Kingdom of Saudi Arabia is subject to government policies aimed at achieving a balance between supporting local industries and stimulating investments in the sector. Until recently, local gas prices were relatively low, providing a competitive advantage for petrochemical and energy industries, but at the same time reducing the feasibility of investing in new exploration and production projects. In response to changes in the global market and rising production costs, the government has begun implementing a gradual policy to liberalize gas prices, linking them partially to global prices while considering the specifics of the local market. Industrial gas pricing policies have been updated within the framework of Vision 2030, leading to gradual price increases and encouraging companies to invest in modern technologies to reduce costs and increase efficiency. Currently, gas is priced through long-term government agreements, often using the dollar as a price reference, with some linkage to regional prices in the Arabian Gulf. These policies aim to ensure the sustainability of the sector and achieve attractive returns for investors while maintaining the competitiveness of local industries in global markets. On the other hand, the government seeks to enhance pricing transparency and gradually open the door for developing a more organized gas trading market, including futures contracts and diverse investment options. Overall, Saudi gas pricing policies reflect the state's desire to achieve a balance between supporting industrial development and enhancing the sector's attractiveness for local and international investments, while considering shifts in global markets and developments in production technologies.

The natural gas sector in the Kingdom of Saudi Arabia faces a range of challenges, alongside significant opportunities for growth and development. Among the most prominent challenges are the high costs of producing unconventional gas, especially in shale projects like Jafurah, where hydraulic fracturing and drilling operations require massive investments and large amounts of water. Additionally, developing infrastructure, such as pipeline networks and processing stations, poses a significant logistical and financial challenge due to the scale of investments required and the long implementation timelines. Furthermore, Saudi Arabia faces strong competition from major producers like Qatar, the United States, and Russia, who possess advanced technologies and established export markets. In terms of pricing, low local gas pricing presents an obstacle to achieving attractive returns on new investments, despite government efforts to gradually liberalize prices. Environmentally, shale gas projects require effective management of water resources and emissions reduction, necessitating additional investments in clean technologies. Despite these challenges, the sector enjoys substantial growth opportunities, supported by massive reserves of conventional and unconventional gas and strong government backing for implementing strategic projects. Projects like Jafurah offer opportunities for creating new jobs, developing manufacturing industries, and enhancing future exports. International partnerships also open avenues for technology transfer and capital attraction, enhancing the sector's competitiveness. Overall, maximizing the benefits of the Saudi gas sector requires effective management of technical and financial challenges and adopting flexible policies that achieve a balance between economic and environmental sustainability.

Although natural gas consumption in the Kingdom of Saudi Arabia is currently concentrated in the local market, there are clear trends towards enhancing the Kingdom's role as a global gas supplier and strategic partner in international energy markets. In recent years, Saudi Aramco has signed significant agreements with American and European companies for the supply of liquefied natural gas (LNG), targeting to raise its LNG portfolio to about 20 million tons annually in the coming years. These agreements include partnerships with companies like Woodside Energy and Commonwealth LNG, providing Saudi Arabia with a foothold in American and European gas markets. On the other hand, the Kingdom seeks to enhance regional cooperation through joint projects like the Gulf Pipeline, which connects Saudi Arabia with other Gulf countries and provides flexible options for gas exchange as needed. Additionally, joint financing deals with global investment funds open the door for technology transfer and experience sharing, enhancing the sector's competitiveness and reducing investment risks. In terms of policies, the government is working to update regulations to facilitate export operations and develop a future gas trading market, focusing on achieving a balance between meeting local demand and enhancing exports. Overall, export trends and international partnerships reflect Saudi Arabia's ambition to become a regional and global hub for gas trade, leveraging its vast reserves and strong government support for developing infrastructure and modern technologies.

Natural gas occupies a central position in the Kingdom of Saudi Arabia's strategy for transitioning to sustainable energy, particularly concerning the development of the green hydrogen market. Gas is used as an intermediary source for producing conventional hydrogen through thermal conversion (Steam Methane Reforming), where hydrogen is separated from carbon in methane. With the Kingdom's commitment to reducing carbon emissions, projects are being developed for capturing carbon associated with hydrogen production, allowing for the production of what is known as blue hydrogen. Simultaneously, Saudi Arabia is investing in green hydrogen projects that rely on renewable energy to provide a clean and emission-free energy source, with plans to export hydrogen to European and Asian markets. Natural gas serves as an important bridge in this transition, providing relatively clean fuel for electricity generation, water desalination, and supporting heavy industries, thus reducing reliance on oil during the transition phase towards renewable energy. Experimental projects are also underway that combine gas and hydrogen production, focusing on enhancing efficiency and reducing costs. On the other hand, international partnerships in gas and hydrogen enable technology transfer and local capacity development, enhancing Saudi Arabia's position as a global hub for sustainable energy. Overall, the integration of natural gas and hydrogen reflects the Kingdom's vision to achieve a balance between economic growth and environmental protection, utilizing natural resources and modern technologies to support the national energy transition.

The natural gas sector constitutes a fundamental pillar in the Kingdom of Saudi Arabia's Vision 2030, which aims to achieve comprehensive economic transformation and diversify national income sources. The sector is expected to witness accelerated growth in the coming years, driven by massive investments in exploration and production projects, infrastructure expansion, and strengthening international partnerships. The government estimates that gas production will cover an increasing portion of domestic energy demand, reducing reliance on oil and providing larger quantities for export. Projects like Jafurah will contribute to creating thousands of new jobs, developing manufacturing industries, and enhancing industrial exports. On the other hand, government policies to liberalize gas prices and stimulate investments enhance the sector's attractiveness to local and international investors, focusing on adopting the latest technologies to achieve efficiency and environmental sustainability. In the environmental field, the Kingdom is committed to developing carbon capture technologies and producing green hydrogen, supporting national goals for reducing emissions and transitioning to a low-carbon economy. In terms of global competition, Saudi Arabia seeks to enhance its position as a reliable energy supplier, focusing on regional integration and cooperation with international partners in production, export, and modern technologies. Overall, Vision 2030 provides a comprehensive strategic framework for developing the natural gas sector, achieving a balance between economic growth and environmental sustainability while maximizing the benefits of natural resources to enhance the Kingdom's position in the global energy market.