GE Sees Saudi Energy Sales Doubling as Gas Turbines Cut Oil Use

General Electric Co. (GE) expects to double energy revenue from Saudi Arabia in the next five years by increasing sales of gas power turbines, curbing the amount of oil needed locally to produce electricity.

With oil prices around $100 a barrel, Saudi Arabia and other oil producers in the Middle East will try to free more of their crude for exports rather than burning it to generate electricity, GE Vice Chairman John Krenicki, who heads the Fairfield, Connecticut-based company’s Energy Infrastructure division, said in a June 1 interview.

“The GDP here is growing by 5 to 6 percent and there is a huge need to be energy efficient, so I see no reason why our business will not double in the coming five years,” Krenicki said in Dammam, Saudi Arabia, where the company started up a $250 million plant to build and repair turbines for power generators.

GE has 500 installed gas turbines in Saudi Arabia that generate about half of the country’s electricity, he said. Saudi Arabia is GE Energy’s biggest equipment customer.

Saudi Energy Demand

Saudi Arabia’s energy demand may double in 10 years, and GE stands to retain its current market share by continuing to provide more efficient power-generation equipment, Krenicki said.

Saudi Arabia has an overall generating capacity of about 45,000 megawatts, according to the state utility Saudi Electricity Company. That’s likely to climb to 75,000 megawatts by 2018 and more than 120,000 megawatts by 2030, according to the utility.

The world’s largest crude exporter may need to burn as much as 3 million barrels of oil a day by 2020 from 800,000 barrels of now to generate power if it doesn’t improve efficiency, Ziyad Al Shiha, the executive director of Aramco Power Systems, told reporters May 15 at a conference in Dhahran, Saudi Arabia.

“My job is to see the future and 10 years from now the biggest trend in this region will be energy efficiency,” Krenicki said. “Using hydrocarbon fuel more efficiently for power generation will lead to a big market for GE.”

In addition to boosting gas-turbine sales in Saudi Arabia, GE will focus on winning contracts from the oil, petrochemical, and mining sectors, Krenicki said.

Selling to Saudi Aramco

Saudi Aramco, the world’s largest state-owned oil company, plans to double its power-generating capacity to 4,000 megawatts by 2015 to supply all the electricity it expects to need for crude and natural-gas production.

The additional capacity wouldn’t be part of the national power grid and would make Aramco independent in power by 2015, Aramco’s Al Shiha said.

GE, the world’s biggest provider of power-generation equipment and services, said today it had agreed to sell four of 9FB gas turbines to Harbin Electric Co. to use at wind and solar projects in China. Two of the turbines will incorporate so- called FlexEfficiency technology that enables them to ramp up twice as fast in response to fluctuations in wind or solar power.

To contact the reporter on this story: Wael Mahdi in Khobar at wmahdi@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.