A Saudi energy analyst said the world’s top crude exporter is not at risk of becoming a net importer of oil, rubbishing a recent report by Citigroup Inc.
Mohammad Al-Sabban said a Citigroup study published on 4 September is “unrealistic” as it forecasts that Saudi Arabia will maintain its production capacity for years at the current level of 12.5 million barrels a day.
Saaban, who also works as his country’s chief negotiator on climate-control issues, said that the desert nation has been increasing its production capabilities during the last few decades.
“The kingdom’s production capacity changed in the past, and it’s changing according to the needs of global demand,” he said in an interview with Bloomberg adding that “it was never fixed for a very long period at a certain level.”
A report published by New York-based Citigroup said Saudi Arabia may need to import oil by 2030 if the country’s domestic crude use continues to outpace gains in production, blaming official subsidies encouraging oil consumption as the main reason for this potential outcome.
Saudi Arabia depends on oil for 86% of its annual revenue and is accelerating exploration for natural gas and is planning to develop solar and nuclear power to preserve more of its valuable crude for export.
The Saudi analyst acknowledged that fuel subsidies are contributing to higher oil use and said the government is not opposed to reviewing local pricing.
“Any decision to reduce subsidies would need to take into account the possible impact on the competitiveness of Saudi exports,” he said.
According to Citigroup, Saudi Arabian power providers pay $5 to $15 a barrel for fuel from state-owned Saudi Arabian Oil Company.
Saudi Arabia says it has plans in place to gradually replace crude with gas as fuel for power stations, as it seeks to free more oil for export. The country has refused to import gas, unlike neighbouring producers such as Kuwait and the United Arab Emirates that also lack fuel to generate power.
Electricity & Co- Generation Regulatory Authority Governor Abdullah Al-Shehri said on Sunday the kingdom is currently using natural gas to fuel 50% of its power plants, while crude oil, heavy fuel oil, and distillates make up the other 50%.
“We will keep replacing crude with gas as fuel depending on the availability,” he said.
The country is currently forcing all new houses to use insulation and is no longer importing electrical equipment that uses power inefficiently, Shehri added. These two steps will slash peak-demand for electricity by half in coming years, he said.
While there are 6 million buildings in the country that aren’t properly insulated, the government is targeting new housing expects to see 400,000 units built annually.
Saudi Arabia may burn 850 million barrels of oil a year to generate electricity by 2030 if doesn’t become efficient in energy consumption, Shehri said on May 8.