How the Middle East is upping its game to monetise natural gas reserves

When most people think of natural gas production in the Middle East, two countries typically spring to mind – namely Iran and Qatar. The former is the region’s largest producer while the latter is among the world’s leading exporters of liquefied natural gas.

But others in the region, traditionally strong in oil production, are increasingly joining their ranks with palpable enthusiasm. And for good reason.

As the world’s power demand rises with the proliferation of artificial intelligence, advanced computing and digitalisation of many aspects of our lives, there is consensus that natural gas would be the fuel over the medium- to long-term to service the bulk of that demand. Unquestionably, the opportunity is there for the taking.

Rising opportunities, rising volumes

Facing this promising horizon are the Middle East’s big two producers with very different market profiles. Iran, which produces around 25 bcf/d of natural gas and is the current regional leader, uses 65% of it for its domestic market.

Bulk of its exports head via the Tabriz-Ankara pipeline to Turkey. Lack of investment and technology, coupled with the impact of Western sanctions is unlikely to materially alter Iran’s market profile anytime soon.

By contrast, Qatar which produces around 17 bcf/d, exports close to 60% of the volume via a prolific LNG infrastructure. It was the world’s leading LNG exporter until the US overtook it in first quarter of 2024.

Eager to regain both its global crown as well as regional bragging rights, that very year Qatar announced an investment programme to 2030 aimed at increasing production at its North Field by 85%. Ironically, the field is on the same geological plate it shares with Iran.

Qatar’s key export destinations extend to three of the big five LNG importers, namely China, Japan and South Korea. But eyeing a lucrative international market and domestic usage, traditional oil powerhouses – Saudi Arabia and the United Arab Emirates – are significantly increasing their respective natural gas footprints.

A growing group

At present, Saudi gas production is just north of 10 bcf/d, according to the US Energy Information Administration. However, it currently does not export any of it. All of this might be about to change. That’s if the ambition of its majority state-owned energy company Aramco is anything to go by.

On August 5, at the publication of its latest financials, Aramco reiterated its target for a more than 60% increase in gas production by 2030 compared to baseline 2021 levels.

That baseline volume is not dissimilar to its current production levels. The development of its flagship Jafurah gas field is expected to be a major part of that journey to producing more than 16 bcf/d within five years. Whether these volumes hit the international market or not is a matter of conjecture, given the needs of Saudi Arabia’s own burgeoning economy.

The UAE’s overtures offer another exciting prospect, with its efforts led by ADNOC Gas, a dedicated natural gas business division of the oil major.

The country’s current production level is just shy of 6 bcf/d. But it is targeting a more than doubling of that figure by the end of the decade. The focus also remains on achieving self-sufficiency in terms of its own domestic needs.

Additionally, it is worth noting that both Aramco and ADNOC, alongside QatarEnergy, are boosting their LNG portfolios outside the Middle East by acquiring sizable stakes in global upstream, liquefaction and regasification capacity projects. This is part of a more holistic approach to a global natural gas production, procurement, supply and trading ecosystem.

Other noteworthy contributors of current and predicted growth in regional production volumes are Oman and Israel, with productions levels north of 4 bcf/d and 2 bcf/d respectively in any given year, accompanied by a desire to double that by the end of the decade.

Plenty more to follow

According to the Gas Exporting Countries Forum and Wood Mackenzie, an investment range of $120-$125 billion may increase production in the Middle East by as much as 86 bcf/d by 2030. Around 50% of that potential increase might well be made available for export, Wood Mackenzie adds.

Such projections, provided they come through to fruition, paint an upbeat end-of-decade picture for volumes in the Middle East. This promising future will be the subject of wider deliberations at Gastech 2025, one of the world’s leading natural gas industry events being held in Milan, Italy this year from September 9 to12.

Of course, the impact of natural gas prices and their direction will have a bearing on a cyclical business and simply cannot be ignored.

But as things stand, the Middle East is tipped to rub shoulders with North America, currently the dominant natural gas producing region in the world, and is on track to overtake Asia. That may likely happen sooner than we think, if the investment climate remains largely benign.