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Gulf States Aim To Mitigate US Shale Revolution

Oxford Analytica

Over the next few decades, US shale gas production is predicted to transform the global energy market radically. Technological breakthroughs in horizontal drilling and hydraulic fracturing have made complex gas reservoirs economically feasible to exploit. US shale gas exports will directly compete with liquefied natural gas (LNG) exports from the Middle East and could even undermine regional downstream diversification by the 2020s.



  • Low priced energy in the United States will increasingly attract manufacturers, petrochemical firms and energy intensive industries.
  • Middle Eastern states will face long-term economic threats as their comparative advantage in gas feedstock prices declines.
  • Gulf states will increasingly invest in North American shale gas assets in a bid to secure additional gas supplies.
  • Arab countries with gas deficits will benefit from lower gas prices.

What next

US shale gas will put downward pressure on global LNG spot prices once exports begin. This will benefit consumers of Middle Eastern gas, but weigh on exporters with high breakeven prices. Middle Eastern petrochemical producers will find their downstream industries becoming increasingly uncompetitive when compared to the relatively low-cost structure of US shale gas inputs. However, utilising US shale gas technology could enable natural gas-rich Arab countries to exploit more of their complex gas reservoirs. […]

Responding to the challenge

In order to mitigate the competitive threat from future North American LNG exports and also to secure additional gas supplies, Middle Eastern states are taking a number of steps.

US shale gas extraction technology could assist Arab countries extract complex natural gas reservoirs more cheaply

Technology counterweight?

Saudi Aramco in 2012 created Saudi Aramco Energy Ventures in Houston to spur investment in startup hydrocarbon firms and to enable export of that technology to Saudi Arabia to assist with production of its shale gas reserves.

Saudi Aramco also has a joint venture with Frac Tech, a hydraulic fracturing company based in Texas, in order to grant technical assistance for complex gas production in the kingdom.

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