ALKHOBAR: Saudi state oil giant Aramco is shifting its exploration and production focus to gas to meet rapidly rising domestic demand as its program to expand oil capacity comes to a close.

Falling global oil consumption has left the Kingdom sitting on its biggest supply cushion in years and allowed it to shift attention from oil to booming gas demand at home.

“There will be more gas developments,” a senior source at Aramco told Reuters. “We are expanding gas activity and we are slowing down oil.”

Saudi gas demand has risen with an economic boom financed by record crude export revenues as the oil price rallied from 2002 to 2008. Economic momentum continues, despite lower oil prices, as the Kingdom presses ahead with projects to diversify away from dependence on crude sales revenue.

“Gas is a high priority as it is used to fire power plants, to desalinate water and as a feedstock for petrochemicals,” said Sadad Al-Husseini, a former top executive at Aramco.

Annual gas demand in the world’s top oil exporter is growing at 7 percent per year. Demand was around 7.5 billion cubic feet per day (cfd) last year, estimated Siamak Adibi, senior Middle East consultant for FACTS Global Energy.

“There is a real challenge to meet domestic market needs,” he said. “Demand is growing day by day.

Nearly half of Saudi gas is produced as a by-product of crude, so volumes fluctuate with oil output. Lower global demand has forced the Kingdom to pump oil at the slowest rate for six years, so some gas supply has been lost.

But drilling activity at gas fields was increasing even as oilfield work slows, sources said. “There’s increasing gas activity, more rigs are moving from oil to gas,” one industry source in the Kingdom said.

Aramco has accelerated the development of pure gas, or gas from fields not associated with oil. It plans to boost capacity to process that gas to 9 billion cfd by 2015, up from around 6.2 billion cfd now.

Aramco was considering programs for rapid development of pure gas at the Arabiyah and Hisbah fields. It began drilling at Karan last year, its first offshore pure gas project.

Saudi Arabia has made it clear that balancing global oil markets is a priority, regardless of the challenges this throws up with gas supply at home. When it lacks gas for power plants, it burns oil products and crude. Power plants on its west coast tend to burn liquid fuels, while those on the east coast burn gas.

“It’s just a matter or optimization,” said one Saudi industry insider.

Aramco completed most of the work on reaching its oil capacity target of 12.5 million bpd when it started up the Khurais oilfield in early June. Spare capacity is 4.5 million bpd, more than double its target cushion of 1.5 million bpd to 2.0 million bpd to meet surprise global supply disruptions. The next oilfield earmarked for development is Moneefa, but Minister of Petroleum and Mineral Resources Ali Al-Naimi has said that would go ahead only when global demand warranted.