Saudi Arabia is boosting imports of fuel oil to supplement the use of natural gas to generate power and cool homes in the summer months, freeing up more of its crude for export, according to Energy Aspects Ltd.
“Fuel oil is on the rise, especially as prices had fallen quite sharply earlier in the year,” Amrita Sen, chief oil market analyst at the London-based consultant, said by e-mail yesterday. “With new fuel-oil power plants operating, we would continue to see fuel-oil burn rise.”
The world’s largest crude exporter imported 77,800 barrels a day of fuel oil from January to May this year, up 39 percent from the same period in 2012, according to official data posted yesterday on the Joint Organisations Data Initiative’s website.
Saudi Arabia has the most surplus capacity for producing crude in the 12-member Organization of Petroleum Exporting Countries. It pumped 9.47 million barrels a day in June, data compiled by Bloomberg show. The nation used 547,000 barrels a day of crude in May to produce electricity, or 2.1 percent less than a year ago, even as Saudi electricity demand grew by 8 percent a year, according to JODI statistics.
Greater domestic gas production enabled the country to substitute gas for crude in some power stations, the International Energy Agency said in its latest oil-market report on July 11. Sen said increased imports of fuel oil were another important factor in the fall in crude use.
Consumption of fuel oil will grow in July and August, during the Muslim holy month of Ramadan that began July 10, she said. More than 2 million pilgrims entered the country in the first week of Ramadan to visit the holy city of Mecca, according to the government.
Saudi Arabia will start cutting these imports from next year with the commissioning of three new refineries, starting with the Satorp facility in Jubail, Sen said. Yasref, another 400,000-barrels-a-day plant under construction in Yanbu, is to come online next year, followed by a refinery in Jazan with equal capacity in 2016.
“There will be domestic fuel oil that can be fed into these units, while crude oil can be kept for the export market,” Sen said.
Saudi Arabia’s gas-production capacity rose by 18 percent in July last year, when the Karan field was able to produce at full capacity of 1.8 billion cubic feet a day.