Nukes for Saudi

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Saudi Arabias rapid increase in population growth, from 5 million in 1965 to 25 million in 2010, has been one of the driving forces for the increasing energy consumption. Even though the influx of foreign workers and natural growth have been on the negative, the population is still projected to reach 27 million in 2015 and 32 million in 2025.

Consumption of energy within a nation is dependent on population, standard of living, and energy efficiency of the economy.From dairy farms that run air conditioning for thousands of cows to the usage of private jets by the elites, Saudi is burning more and more energy.This has capped the amount of oil export. The Kingdom now has shifted its interest in nuclear power.

The spare capacity is also a potential weapon to balance the deficit, it is reducing the formidable spare capacity usage.The Saudi government said it is working on a comprehensive energy strategy later this year. According to Prince Turki, the kingdom is working on developing wind, solar, and nuclear sources to avoid sapping oil exports.

In addition, domestic subsidies have kept the fuel prices low and at the same time give citizens and companies no incentives to cut back. The peak-time power demand rose by 10% last year, according to the country’s deputy electricity minister. If the Kingdoms energy-consumption growth rate of 7% per year continues, after 20 years they will have an output of eight million barrels a day. Brad Bourland, chief economist of Jadwa Investment in Riya, said “They’re really within, just mathematically, 20 years of having very little oil to export.” He also added that the situation is very challenging.

Energy subsidy

Until this year, some analysts believed the kingdom would slash subsidies to cap rising consumption. The cost of Saudi Arabia’s energy subsidies was second only to Iran’s in 2009, at around $35 billion. But after the Middle East unrest, the ruling al Saud family pumped in nearly $100 billion into the economy to make life cheaper and easier for most citizens.

Some Saudi officials and analysts have, however, lower projections for consumption growth.Khalid al-Falih, chief executive of state energy producer Saudi Arabian Oil Co., said that if left unchecked, the domestic energy consumption would reduce three million barrels of crude available for export by 2028.

Atomic source

The government has been working more closely at atomic energy.

Last year, the government had set up the King Abdullah City for Atomic and Renewable Energy (KA-CARE), to formulate a policy on nuclear power. Further to it, KA-CARE has entered into an agreement with French nuclear developer Areva SA.Saudi Arabia will also unveil a national energy policy this year, outlining how much electricity is to be produced by nuclear plants and in what time frame, said a KA-CARE spokesman.

Other options are limited. Saudi Aramco is raising its natural-gas production levels, but it has so far not located any new gas fields.The electricity ministry said it hopes to cut consumption with efficiency measures such as improvements to power stations and new standards for air conditioning units. But with demand rising so quickly, they can at best delay the problem.

A Saudi official said Saudi Electricity Company was burning 1.1 million barrels a day of crude oil in power stations. Oil analysts say that the figure rises during summer months.

Source: Wall Street Journal, Energy Bulletin

 

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