Saudi Arabia’s consumption of oil and natural gas is growing at a high rate compared with the growth in the kingdom’s population and economy, the Saudi Press Agency reported, citing the central bank.
The average local consumption of gas and oil grew 5.9 percent in the past five years, the official news service reported, citing the kingdom’s central bank governor Muhammad al-Jasser. “Domestic consumption of oil and gas is posting continuing growth and at high rates,” the report said. “This requires looking into the reasons behind the increase in oil and gas consumption and working on rationing it.”
The Saudi economy, excluding oil, may expand 4.5 percent in 2010 according to the International Monetary Fund, compared with 3.3 percent in the previous year. The population grew 20 percent since 2005 to 27.1 million, according to data from the Department of Statistics and Information published by the Saudi Press Agency in August.
The kingdom, the largest Arab economy, must create jobs to employ its youth and provide housing for its growing population, the Saudi Press Agency reported, citing al-Jasser. Saudi Arabia needs to boost home ownership by passing a long-planned mortgage law that would encourage banks to provide mortgage lending, he said.
King Abdullah was presented the Saudi Arabia Monetary Agency annual report late yesterday.
Saudi Arabia is seeking new gas supplies to feed growing demand for electricity and to support industries, such as petrochemicals, and create jobs. Power demand in the holder of the world’s oil reserves is set to increase 8 percent a year as the government invests to spur economic growth and the population expands.
Saudi Arabia, lacking natural gas supplies to meet domestic demand, is burning oil in power plants as it expands industry. Demand for oil to generate power could account for as much as 10 percent of Saudi Arabia’s total oil production capacity by 2012, Lawrence Eagles, head of commodity strategy at JPMorgan Chase & Co. in New York, said earlier this year.
“Increasingly more and more energy is being diverted from exports to domestic consumption,” Jarmo Kotilaine, Chief Economist at Jeddah-based NCB Capital, said in a phone interview today. “And it is being used in a very inefficient way because the pricing doesn’t reflect market costs.”
The kingdom’s energy demand will rise to 8.3 million barrels a day of oil equivalent in 2028 from 3.4 million barrels last year unless it becomes more efficient, Khalid Al-Falih, Saudi Aramco’s Chief Executive Officer, said in a speech posted on the website April 26.