Energy in Saudi Arabia

Map of Saudi Arabia

Energy in Saudi Arabia describes energy and electricity production, consumption and export in Saudi Arabia.

Saudi Arabia is one of the world's largest energy producers, pumping approximately 10.782 million barrels per day (1.7142×10^⁶ m³/d) of petroleum.^[1] While most of this is exported, domestic use is rapidly increasing, primarily for electricity production.

Saudi Arabia's economy is petroleum-based; roughly 75% of government revenues and 90% of export earnings come from the oil industry. The oil industry produces about 45% of Saudi Arabia's gross domestic product, against 40% from the private sector.^[2] Saudi Arabia has per capita GDP of $20,700.^[2] The economy is still very dependent on oil in spite of a diversification effort, in particular in the petrochemical sector, with Sabic.

Reserves

Nationally, the highest proved oil reserves are in Saudi Arabia (18 % of global reserves, over 260 billion barrels (41×10^⁹ m³)). Proved natural gas reserves in Saudi Arabia are over 7 trillion cubic metres (250 trillion cubic feet). Global production in 2009 reached 29 billion barrels (4.6×10^⁹ m³) of oil and 3 trillion cubic metres (110 trillion cubic feet) of natural gas.^[3]

Overview

Energy in Saudi Arabia[4][5][6][7]
	Capita	Prim. energy	Production	Export	Electricity	CO2-emission
	Million	TWh	TWh	TWh	TWh	Mt
2004	24.0	1,633	6,469	4,811	148	324
2007	24.2	1,748	6,412	4,606	175	358
2008	24.7	1,879	6,734	4,796	187	389
2009	25.4	1,836	6,145	4,324	199	410
Change 2004-2009	6.0 %	12.4 %	-5.0 %	-10.1 %	34.5 %	26.3 %
Mtoe = 11.63 TWh, Prim. energy includes energy losses

Domestic consumption

Saudi Arabia is the fastest growing electricity consumer in the Middle East, particularly of transportation fuels. In 2005, Saudi Arabia was the world's 15th largest consumer of primary energy, of which over 60 percent was petroleum-based. The remainder was made up of natural gas.^{[citation needed]}

Two ministries share responsibility for the energy sector: the Ministry of Oil and the Ministry of Water and Electricity. The Ministry of Water was created in 2001 by merging water related sub-departments. Its stated purpose is "to prepare a comprehensive plan to establish water and sewage networks all over the Kingdom. It will also develop the country’s water policies and propose new regulations to preserve water."^[8][9] In 2003, this department was expanded.

Electricity consumption

Electricity consumption in Saudi Arabia increased sharply during the 1990–2010 period due to rapid economic development. Peak loads reached nearly 24 GW in 2001—25 times their 1975 level-and are expected to approach 60 GW by 2023.^[2] The investment needed to meet this demand may exceed $90 billion. Consequently, there is an urgent need to develop energy conservation policies for sustainable development.^{[citation needed]}

Electricity generation is 65% from Oil 27% from Natural Gas and 8% from steam. Generation capacity is approximately 30 GW.^[2] A looming energy shortage requires Saudi Arabia to increase its capacity.

The government has approved the construction of a $300 million dollar facility to turn waste into energy. The facility will process 180 tons of waste per day, producing 6 MW of electricity and 250,000 US gallons (950 m³) of distilled water.^[2]

Conservation

Towards the end of 1998, the electricity sector embarked upon a major restructuring program. One of its aims was to achieve sustainable performance. Although progress has been made, remaining challenges, include high demand growth, low generation capacity reserve margins, inefficient energy use, absence of time-of-use rate adjustments, and the need for large capital investments to fund expansion.

Current sustainable policies, particularly those encouraging energy conservation, led to peak load savings of more than 871 MW in 2001, mainly as a result of collaboration between the Ministry of Water and Electricity and the Saudi Electricity Company.

Policies and programs are being developed for public awareness, energy regulation and legislation, and energy information and programming. If energy conservation is successful, demand can be reduced by 5–10%. This is equivalent to 3–6 GW of additional capacity, which represents a possible $1.5–3.0 billion saving over 20 years. Typically, investment in energy efficiency is 1% of utility sales revenues, which for a country like Saudi Arabia could be $15–60 million annually. If only savings on air conditioning are considered, the return on investment is equivalent to 400–500 MW of generating capacity—a saving of up to $0.25 billion p.a.^{[citation needed]}

Bureaucratic history

The development of electricity in the Kingdom of Saudi Arabia can be divided into two stages:

Phase 1: Initially, electricity generation was left to small, local companies. Such companies sold power at varying rates according to local costs.^{[citation needed]}

In 1961 (1381 AH), the Department of Electricity Affairs was established within the Ministry of Commerce, with a mandate to regulate the electricity generation sector and to issue permits and licenses to electricity companies and to encourage national investment.^{[citation needed]}

In 1972 (1392 AH), the Department of Electricity Services was established. This Department was separated from the Ministry of Commerce and was given the additional responsibility of planning electrical services for the Kingdom as a whole.^{[citation needed]}

In 1974 (1394 AH), the Ministry of Commerce was divided into the Commerce Agency and the Industry and Electricity Agency. In that same year, the electricity tariff was set for all companies at a level below their actual costs.^{[citation needed]}

In 1975 (1395 AH), the Government adopted ambitious plans for economic development requiring investment in industry and electrification. The Ministry of Industry and Electricity was formed, with an Industrial Affairs Agency and an Electricity Affairs Agency. The Electricity Affairs Agency expanded the planning, co-ordination and regulatory roles for providing electrical services. The Electricity Corporation was established in 1976 (1396 AH) to coordinate the electricity plans contained in the Kingdom's Development Plan.^{[citation needed]}

From 1976 to 1981 (1396 – 1401 AH) all community electricity generation was gradually subsumed under the four regional Saudi Consolidated Electricity Companies (SCECOs), located in the Central, Eastern, Southern and Western regions.^{[citation needed]}

With the formulation of a coherent development plan and the establishment of the SCECOs, the Government was able to bring electricity to the towns, villages and settlements throughout the Kingdom.^{[citation needed]}

The number of electricity customers grew from 216,000 in 1970 (1390 AH) to 3,035,000 in 1996 and 4,955,906 in 2006.^{[citation needed]}

In May, 2003, electricity was made the responsibility of the Ministry of Water and Electricity.^{[citation needed]}

Saudi Consolidated Electricity Companies (SCECOs)

The first SCECO (SCECO-East) was created in 1976 (1396/97 AH). This was followed in 1979 (1399/1400 AH) by SCECO-South. Electricity for the southwest is provided by another consolidated company, and the central region is served by SCECO-Central.^{[citation needed]}

The General Electricity Corporation (GEC) had overall responsibility for the Kingdom's electricity system and had direct responsibility for the provision of electrical supplies to rural areas not then covered by the consolidated companies. The GEC represented the government equity holdings in all the independent electricity generating companies and was a source of finance for those companies' capital requirements.^{[citation needed]}

In 1998, the Government announced the reorganization of the electricity sector by establishing a stock market company, named the Saudi Electric Company, through the merger of all the electricity companies operating in the King.^{[citation needed]}

Petroleum

Saudi Aramco's Core Area in Dhahran

Reserves

Main article: Oil reserves in Saudi Arabia

As of January 2007, Saudi Aramco's proven reserves were estimated at 259.9 billion barrels (41.32×10^⁹ m³), comprising about 24% of the world total.^[10] The Ghawar oil field is the largest oil field in the world, holding over 70 billion barrels (11×10^⁹ m³). Ghawar is able to produce 5 million barrels per day (790×10^³ m³/d) of oil.^[10] Aramco announced 100 thousand barrels per day (16×10^³ m³/d) expansion and integration with neighboring petrochemical plants Ras Tanura and Yanbu by 2010 to 2012.^[2]

Production

Saudi Arabia produces slightly over 11 million barrels per day (1.7×10^⁶ m³/d) of oil,^[1] exporting 8.9 million barrels per day (1.41×10^⁶ m³/d). The government is investing over $71 Billion to increase oil production to near 12 million barrels per day (1.9×10^⁶ m³/d) by 2009 and up to 12.5 million barrels per day (1.99×10^⁶ m³/d) by 2015.^[2] This may be attributed to the report that 700 thousand barrels (110×10^³ m³) of excess capacity are needed to compensate for a natural decline in availability.^[2]

Shipping

The majority of the oil is shipped via supertankers to refineries around the world. Three major ports are used for the shipping. Ras Tanura is the world's largest offshore oil loading facility with 6 million barrels per day (950×10^³ m³/d) capacity. The Ras al-Ju'aymah facility on the Persian Gulf loads nearly 75% of the exports. The last of the three largest terminals is the Yanbu terminal located on the Red Sea.^[2] The enormous sea shipping capacity is vital to Saudi Arabia given the absence of international pipelines.

New oil fields in development

New oil fields will add up to 3.6 million barrels per day (570×10^³ m³/d) to production capacity by 2011. The new fields are Haradh, Khurais, Khusaniyah, Manifa, Neutral Zone (shared with Kuwait), Nuayyin and Shaybah I II & III.

Aramco

Until 1973 the government did not receive a share of the oil drilled within its boundaries. In 1973 the Saudi government gained a 25% share of the interest from Aramco.^[10] In 1980 the Saudi government purchased nearly 100% of the Aramco oil business giving Saudi officials complete control over prices and production. In 1988 the oil company was renamed Saudi Aramco.^[10] The company is controlled by the government but also has a board of advisors and a CEO. The current CEO and President of Saudi Aramco is Khalid A. Al-Falih.^[10]

Natural gas

Saudi Arabia has the world's fourth largest reserves of natural gas, of 240 trillion cubic feet (6.8 trillion cubic metres). One-third of this reserve is found in the Ghawar.^[2] Before the master gas system, the oil company flared (burn) the gas as it came from the oil well. Until recently production of natural gas was tightly controlled as it is so closely linked to oil production. The World Trade Organization criticized the government and Aramco for heavily subsidizing natural gas. According to the Energy Information Administration the price was $0.75 MMBtu American dollars.^[2]

Global warming

See also: Regional effects of global warming

Saudi Arabia was the 15th top carbon dioxide emitter per capita in the world in 2009: 18.56 tonnes per capita.^[11] All emissions from building and cement production are local but some people may argue that some United Arab Emirates produced fuels are consumed abroad.^[12]

See also

• Saudi Arabia energy law
• Saudi Association for Energy Economics

References

1. ^ ^{a b} "The World Factbook – Saudi Arabia". Cia.gov. https://www.cia.gov/library/publications/the-world-factbook/geos/sa.html. Retrieved 2011-04-28. 
2. ^ ^{a b c d e f g h i j k} "Energy Information Agency, Country Analysis Briefs 2007". Eia.doe.gov. http://www.eia.doe.gov. Retrieved 2011-04-28. 
3. ^ 2011 report on oil and gas companies, Promoting revenue Transparency Transparency International 2011 page reserves 114–115
4. ^ IEA Key World Energy Statistics 2011 October 2011
5. ^ IEA Key energy statistics 2010 Page: Country specific indicator numbers from page 48
6. ^ Key world energy statistics 2009
7. ^ Key world energy statistics 2006
8. ^ "Ministry of Water and Electricity – SAMIRAD (Saudi Arabia Market Information Resource)". Saudinf.com. 2009-04-20. http://www.saudinf.com/main/c6x.htm. Retrieved 2011-04-28. 
9. ^ http://www.eia.doe.gov/emeu/cabs/saudi.html
10. ^ ^{a b c d e} Saudi Aramco History
11. ^ World carbon dioxide emissions data by country: China speeds ahead of the rest Guardian 31 January 2011
12. ^ Which nations are most responsible for climate change? Guardian 21 April 2011