Saudi Arabia, the world’s largest crude oil exporter, plans to invest more than $100 billion to become the world’s third-largest shale gas producer after the U.S. and Russia as its economy braces for a decarbonized society.

Crucial to Riyadh’s plans is the Jafurah gas field in the country’s east. It is the largest shale gas field in the Middle East with confirmed reserves of 229 trillion cubic feet, equivalent to about 70 years of Japan’s liquid natural gas imports. Shale gas is natural gas extracted from shale rock formations.

State-owned Saudi Aramco has indicated that it expects to invest at least $100 billion in Jafurah. On June 30, it placed a roughly $25 billion order for plant construction and other work. Gas production is slated begin in 2025.

The project is expected to be the largest shale gas development outside the U.S., which became the world’s largest natural gas producer after what is known as the “shale revolution” vastly increased the country’s output in the 2000s.

Technologies like horizontal drilling and hydraulic fracturing developed during that period made it possible to extract shale gas trapped in rock formations at a relatively low cost.

Saudi Arabia will introduce these technologies through oil service companies. “A new shale revolution is taking place,” Saudi Aramco CEO Amin Nasser has declared in the past.

The country is also looking beyond Jafurah. Total Saudi natural gas production will increase by 60% from 2021 levels to 21.3 billion cubic feet per day — equivalent to about 150 million tonnes of LNG per year — in 2030, according to local media. If this goal is realized, the country is expected to become the world’s third-largest natural gas producer.

The gas produced will be used for domestic power generation and other purposes. Saudi Arabia’s power mix is 60% natural gas-fired and 40% oil-fired. Plans call for eliminating emissions-heavy oil from the mix by 2030, replacing it with gas and renewable sources. Saudi Arabia will also consider exporting LNG in the future.

In line with the shift to shale gas, Saudi Arabia announced in January that it would halt plans to expand crude oil production capacity. It had planned to increase production by 1 million barrels per day to 13 million barrels per day by 2027.

Canceling those plans will free up $40 billion in investment between 2024 and 2028, which will be used for natural gas development and other purposes.

Saudi Arabia is also getting involved in the production and trading of LNG in the U.S. and Australia. In March, it completed a $500 million investment in MidOcean Energy, a U.S. company that holds LNG interests in Australia.

In June, it agreed to long-term contracts to procure a total of 6.5 million tonnes per year from two U.S. LNG projects, acquiring a 25% stake in one. It plans to sell the gas to Europe and Asia.

Saudi Arabia is not the only Middle Eastern oil-producing country shifting to gas.

In June, the United Arab Emirates’ state-owned Abu Dhabi National Oil Company decided to invest in a new LNG plant there. With a construction cost of $5.5 billion, it would more than double the country’s LNG production capacity to about 15 million tonnes per year.

In May, it decided to acquire a 10% stake in LNG interests in Mozambique. The project will have an annual production capacity of about 25 million tonnes once all plants are completed.

Also in May, the UAE acquired about 12% interests in a U.S. LNG project with an annual production capacity of about 17.6 million tonnes.

Saudi Arabia and the UAE are focusing on gas development in part because they are aiming to promote energy diplomacy. Demand for natural gas is increasing due to the drive for decarbonization, and major producers the U.S., Russia and Qatar are strengthening their influence in the international community.

If the world achieves net-zero emissions, oil demand in 2050 would fall by 70% compared with 2022, while natural gas demand would fall by only 50%, according to a forecast by British oil company BP. If current environmental regulation and other trends continue, oil demand will fall by 20%, while natural gas demand will go up by 20%.

“A domestic supply of natural gas is… a longevity strategy for state-owned energy companies to invest in local production and to invest in production areas abroad,” said Karen Young, a senior research scholar at Columbia University.

She added that it “makes sense for these national firms to diversify their portfolios, as we also see them doing in renewables and in carbon capture technologies, as well as in full-stream energy capacities in petrochemicals and refining.”