Bloomberg News

Saudi Fuel for Power Plants to Rise 53% by 2017 as Demand Grows

November 23, 2011

Nov. 23 (Bloomberg) -- Saudi Arabia, the world’s biggest crude exporter, will need 53 percent more fuel to fire its power and desalination plants by 2017 as demand jumps, the head of Water & Electricity Co. said.

The kingdom will use 2.3 million barrels a day of oil equivalent by 2017 for power, compared with 1.5 million barrels last year, Omar al-Ghamdi, chief executive officer of the state- run utility, said in a presentation in Riyadh this week. Power production will increase to 74,529 megawatts, from 55,265 megawatts while daily desalinated water consumption will rise 32 percent to 7.4 million cubic meters, according to Ghamdi.

Saudi Arabia is using more of its 12.5 million barrel-a-day oil capacity at home as it builds new houses and industries that require electricity. The amount of crude burned for power generation has doubled since 2008 and may reach 600,000 barrels a day this year, according to the International Energy Agency. The country may use 8 million barrels of oil equivalent a day by 2035, Khalil al-Shafie, interim president of King Abdullah Petroleum Studies and Research Center said at a conference in the capital.

About half of the country’s power plants are inefficient as they use single-cycle gas turbines, compared with combined-cycle models, which recover and use waste heat to generate additional electricity, Ghamdi said. Bids for new plants are evaluated based on an oil price of less than $4 a barrel, which doesn’t encourage selection of the most efficient or lowest fuel- consuming projects, he said.

Saudi policy makers are seeking to produce enough natural gas to reduce crude use in power plants, cutting generating costs and freeing up more oil for export. State-run Saudi Arabian Oil Co., known as Saudi Aramco, is focusing on exploring for natural gas and developing downstream activities such as refining and petrochemical plants as the need for surplus oil wanes, Chief Executive Officer Khalid al-Falih said Nov. 21.

--Editors: Raj Rajendran, Rachel Graham.

To contact the reporter on this story: Ayesha Daya in Dubai at adaya1@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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