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Saudi alarmed by high domestic oil demand

Official report warns local supply may not be enough in 2030
Saudi Arabia is consuming up nearly a third of its crude oil output and supply could fail to meet domestic demand in 2030 if the high consumption trends are maintained, according to a government report.

The Gulf kingdom, the world's top oil exporter and largest Arab economy, currently produces nearly 8.5 million barrels per day of crude but local demand is as high as 2.5-3.4 million bpd, mostly used in power generation, said the report by the state-controlled Saudi Electricity Company ( SEC ).

The report suggested banning work of major shopping outlets during the afternoon period until 7.00 pm and limiting work periods for government departments to between 6.00 am to 12.00 noon in summer to save energy.

"The current oil production levels of around 8.5 million bpd will not be enough to meet domestic demand in 2030 if the current growth in local consumption continues," said Abdul Salam Alyamani, SEC's vice president for relations."These high growth rates constitute a major challenge to Saudi Arabia in the long term as it relies on oil exports to provide nearly 80 per cent of its income."

Alyamani, quoted by local newspapers, warned against "ignoring repeated government calls for cutting power and water consumption."

He said solar energy remains a key option for Saudi Arabia to meet the rapid and steady increase in its power needs and lessen dependence on oil. He noted that the government has already drawn up plans to expand its electricity production by 3,000-4,000 MW annually, adding that Saudi Arabia would get around 1,200 MW through a $1.5-billion common power grid linking it with nearby Gulf countries--UAE, Kuwait, Qatar, Bahrain and Oman.

Alyamani said the Saudi government is spending nearly SR50 billion ($13 billion) a year to subsidize power and water consumption for citizens. Saudi Arabia controls around 266 billion barrels of proven oil resources, more than a fifth of the world's total crude deposits.

It has just completed a major programme to expand its sustainable oil output capacity to over 12 million bpd and intends to push ahead with projects to lift capacity to 15 million bpd in the next years.But the government has also been locked in another major plan to boost its natural gas reserves to meet rising demand and offset oil consumption.

Besides oil and gas, Riyadh has plans to develop solar energy and build 16 nuclear reactors over the next 20 years at a cost of more than $300bn. According to Abdul Ghani bin Melaibari, coordinator of scientific collaboration at King Abdullah City for Atomic and Renewable Energy, Saudi Arabia is in the stage of planning for the nuclear projects and coordination with specialised companies was currently under way. He said companies from any country could bid for the projects, the largest in the Middle East.

"After 10 years we will have the first two reactors. After that, every year we will establish two, until we have 16 of them by 2030," he said. Melaibari said the nuclear reactors would cover about 20 percent of the Kingdom's needs for electricity, adding that the kingdom would launch a 20-year plan this year to introduce renewable clean energy.

© Emirates 24|7 2011

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