Analysis - Saudi summer oil burn should decline this year

Sat Mar 31, 2012 3:42am GMT

By Daniel Fineren and Reem Shamseddine

DUBAI/KHOBAR (Reuters) - Saudi Arabia is likely to burn less crude in its power plants this summer thanks to rising output from dedicated gas fields and gas that would be associated with any increase in oil output to make up for lower Iranian production.

Last summer the world's leading oil exporter burned an average of 730,000 barrels a day (bpd) of crude for electricity to keep the population cool in the hottest months from July to the end of September, official figures indicate.

Hundreds of thousands of barrels of the kingdom's biggest export will again go up in smoke at power plants each day this summer, but the volume of oil used for power is likely to fall.

More supply from the Karan gas field and a likely rise in crude output, which would bring a bonus benefit of more gas as well, should save at least 100,000 bpd in crude use.

"We have spent a lot of money on gas ... and we have many tricks in our pocket in the summer. When we peak in summer, we will surge our gas," Saudi Oil Minister Ali al-Naimi said last week.

Naimi said some 500 million cubic feet a day (mcfd) more gas, or around 90,000 barrels of oil equivalent (boed), would be made available for three or four months.

"So don't think we are just saying, 'OK, the crude demand is going to go up'," he told reporters in Doha. "We are far more concerned about crude burn. Not because we want to export it, but because it is a shame to burn it."

Most countries outside the Middle East cut back oil-fired power generation long ago in favour of gas, nuclear and renewable energy sources.   Continued...

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