The most powerful GCC economy, Saudi Arabia continues to look for more gas to fuel its growing population, but with what result…
With the onset of scorching summer heat, the air-conditioning in Saudi Arabia will be set up a few notches and around the clock - temperatures in the Kingdom of Saudi Arabia are known to regularly rise up to 50 degrees Celsius in the hot months. With the mercury rising, the chief worry for Saudi Arabia is power generation, which is why when the country, awash in oil, declared its push for the ‘golden gas’ – it was a relief.
The Kingdom of Saudi Arabia in early 2000 announced it had begun a search for gas to replace oil as the burning fuel to generate power in the country. This would also potentially free up the precious oil for shipment.
Saudi Arabia is the largest consumer of petroleum in the Middle East, particularly in the area of transportation fuels and ‘direct burn’ for power generation.
According to the US’ Energy Information Administration (EIA), Saudi Arabia was the world’s 13th largest consumer of total primary energy in 2009; 60 per cent was petroleum-based, with natural gas accounting for most of the rest.
Saudi Arabia has set a goal of producing almost half of its power from renewable fuels by 2020 in order to meet domestic power needs and to free up oil and natural gas for export.
Saudi Aramco’s CEO, Khalid Al-Falih warned that rising domestic energy consumption could result in the loss of 3 million barrels per day (bpd) of crude oil exports by the end of the decade, if no changes were made to current trends.
The Kingdom (including the Neutral Zone) had proven natural gas reserves of 288 trillion cubic feet (tcf) at the end of 2012, fifth largest in the world behind Russia, Iran, Qatar, and the United States, according to EIA estimates. About 5 tcf was added in 2012, and over the last decade, Saudi Arabia added over 60 tcf of natural gas reserves.
To meet growing domestic needs for additional production, the Petroleum Ministry and Saudi Aramco announced a $9 billion strategic push to add 50 tcf of non-associated reserves by 2016 through new discoveries (and potentially another 50 tcf of associated reserves).
The national oil company has focused heavily on major offshore gas developments in the Arabian Gulf. The most successful project has so far been the Karan gas project. Saudi Aramco began flowing natural gas from Karan field in the Arabian Gulf via subsea pipeline to the Khursaniyah gas treatment plant onshore in Saudi Arabia in 2011.
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