The need to resolve internal differences over allocations and pricing of natural gas is becoming ever more urgent. Contracts are expected in late February/early March to develop the large Wasit offshore gasfield and Shaybah natural gas liquids projects (December 2010, Economic policy), and, although Aramco insists that it will need incremental volumes for reinjection and use as feedstock for seven new power plants (which together will have total capacity of about 1,000 mw), the Saudi private sector is also increasingly seeking ethane-rich gas for setting up new petrochemical projects. As a result, pressure is likely to mount on the Ministry of Petroleum and Mineral Resources to decide on the allocations.

At present, given the plethora of major petrochemical projects planned, the private sector may get its wish. Top of the list is the major joint venture between Aramco and Dow Chemical of the US-now officially dubbed the Ras Tanura integrated project (RTIP)-for which prequalifications have already been invited for the offsite and utilities package, with a similar invitation due to be issued by late March for the hydrogen plant. The promise of new ethane and methane has also kindled the hopes of PetroRabigh-a joint venture between Aramco and the Sumitomo Corporation of Japan-to move ahead with the second phase of its expansion. Finally, both SABIC and the Bahrain-based Kanoo Group are awaiting final word from the ministry on fresh gas allocations before issuing separate FEED tenders for their methyl methacrylate (MMA) and acrylic acid butol acrylates projects, respectively.

On the gas pricing issue, there is pressure from within the government and Aramco in favour of raising the current price from US$0.75/mBtu. Some have argued for a doubling of the feedstock price of ethane and methane, arguing that production costs will rise significantly given that new supplies will be sourced from offshore, sour gas reserves. Whatever the case, raising the gas price would at least meet the demands of Aramco's upstream arm, but it would potentially affect the economics of some of these large petrochemical projects.

Away from the domestic issue of gas supplies, the International Energy Agency (IEA) has said that Saudi Arabia has been stealthily boosting crude oil output in the past few months to cool an international price rally, with oil prices now at US$100/barrel. According to Reuters, Saudi Arabia has been making more crude available to the market in the past six months. This assessment was based on export data from independent tanker trackers. The IEA did not put any figure on the volume of additional crude being pumped, however.