The highly focused development of the US shale oil and gas sectors since the early 2010s transformed it from one of the world’s largest importers of both to one of its largest exporters of both. But it did much more than that: it reversed the balance of energy power in the world from where it had left it at the end of the 1973 oil crisis. As forecasts for gas demand continue to rise due to fears of new global conflicts and the dramatic expansion of data centers around the world, the Middle East is seeking to expand its own gas production, particularly with a view to developing its own shale resources. In this context, the United States is seen by these countries – most notably Saudi Arabia and the United Arab Emirates (UAE) – not as a future competitor but as a key knowledge resource, a status that Washington is happy to adopt. After all, becoming an integral part of any country’s energy production is as good a way as any—and a better way than most—to keep those relationships working best for the United States.
It is interesting to note at this point the circularity of the story, although with a twist. Prior to 1973/74, the global oil industry had effectively been run by a small group of Western oil companies known as the “Seven Sisters”, as detailed in my latest book on the new global oil market order. These companies, made up of the Anglo-Persian Oil Company (which changed its name in 1935 to the Anglo-Iranian Oil Company, and is now BP), Royal Dutch Shell, three iterations of Standard Oil (Standard Oil of California, Standard Oil of New Jersey and Standard Oil Company of New York), Gulf Oil and Texaco, were able to control oil exploration, development, transportation and prices for decades, until October 1973. At that time, members of OPEC led by Saudi Arabia, as well as Egypt, Syria and Tunisia, began an embargo on oil exports to the United States, the United Kingdom, Japan, Canada and the Netherlands in response to their support for Israel in the Yom Kippur War. By the end of the resulting crisis, in March 1974, the price of oil had risen from around $3 per barrel (bp) to almost $11 per barrel before stabilizing for a time, before returning to an upward trend. This, in turn, fueled the fire of a global economic slowdown, especially felt in the West. The then Saudi Minister of Petroleum and Mineral Reserves, Sheikh Ahmed Zaki Yamani, highlighted that the extremely negative effects of the oil embargo on the West marked a fundamental shift in the global balance of power between developing nations that produced oil and developed industrial nations that consumed it.
From that point on, however, the United States was determined to keep the power of these Middle Eastern countries in check, which it accomplished largely through a political variant of Henry Kissinger’s “triangular diplomacy” that he advocated in formulating America’s dealings with the other two great powers of the time, Russia and China. Kissinger served as National Security Advisor from January 1969 to November 1975 and as Secretary of State from September 1973 to January 1977. This variant focused more on the simple “divide and conquer” principle that undermines opponents over time by pitting one side against the other, taking advantage of any fault lines running through the target areas, whether at the community, national, or international level. These failures could be economic, political or religious, or any combination of them. This is what marked US policy in the Middle East in general terms until the advent of its Shale Revolution. This, in turn, sparked the 2014-2016 oil price war with OPEC, again led by Saudi Arabia, which ultimately saw the United States triumph, as I also discuss in full in my latest book.
Aside from any other lesson that major OPEC member countries may have learned, it is that the United States had been extraordinarily successful in transforming its then-nascent shale oil sector at the time of the outbreak of the 2014-206 Oil Price War into an efficient, mediocre, and low-cost oil production machine, with similar advances in its shale gas sector. It is precisely for this reason that Saudi Arabia and the United Arab Emirates are now seeking help from Washington to develop their own shale resources. Riyadh was the first of the two to take the lead, with US companies involved in the development of its landmark Jafurah shale gas development since around 2019. One of the notable early participants was the US National Energy Services Reunited Corp., which has carried out large-scale hydraulic fracturing operations at the relevant sites. From an investment perspective, the United States has also played a key role in the form of financial giant BlackRock, which led a consortium to invest around $11 billion in Jafurah’s midstream infrastructure. For now, Saudi Arabia’s goal is to increase its gas production by 80% by 2030. According to Saudi Aramco in its third quarter 2025 financial statement published on November 4, phase 1 of the Jafurah gas plant is on track for completion this year. Production is projected to reach a sustainable gas sales rate of 2 billion standard cubic feet per day by 2030.
Meanwhile, the UAE has been developing shale gas reserves with a view to increasing the available energy supply to meet local energy demands and with a view to future exports. According to a recent comment by Abu Dhabi National Oil Company (ADNOC) upstream chief executive Musabbeh Al Kaabi, the company is using knowledge and methodology learned from US hydraulic fracturing in its own fields and working with US-based EOG Resources Inc. to develop oil and gas reserves. Ruwais remains a key location for its shale gas exploration activities, as the Ruwais Diyab unconventional gas concession was initially a joint venture between ADNOC and TotalEnergies, before the French company reduced its involvement to leave ADNOC as lead operator as the project moved into full development phase. The goal here is to produce 1 billion standard cubic feet per day by 2030. This project will work alongside the massive Ruwais conventional oil refinery and a new liquefied natural gas (LNG) facility currently under construction. Overall, the plan is for Ruwais to add 9.6 million tonnes of annual gas export capacity, more than double ADNOC’s current production capacity.
Both countries’ gas production expansion plans are driven by the continued importance of LNG in global energy markets and forecasts of growing gas demand from global data centers, according to the companies involved. LNG has become the world’s leading source of emergency energy since Russia invaded Ukraine on February 24, 2022. Unlike pipeline gas, LNG can be purchased quickly on the market and then quickly shipped to where it is needed. In the 12 months leading up to the Russian invasion, China scrupulously – and with a seemingly supernatural degree of “good luck” – signed multiple long-term LNG contracts at preferential prices, leaving it in an exceptionally advantageous position to weather the resulting storm of spiraling energy prices. Since then, the United States has ensured that countries that had relied heavily on Russian gas supplies – particularly several countries in Europe – have been able to secure long-term LNG contracts with other suppliers. Meanwhile, forecasts are that energy needs driven by artificial intelligence, cloud and heat waves will drive 40% to 50% of incremental global gas demand until the end of 2040 at least. Furthermore, according to industry projections, by that time data center-related demand could add between 150 and 200 billion cubic meters per year worldwide, an increase of 3.6 to 4.9 percent from current projections of global gas demand.
By Simon Watkins for Oilprice.com
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