Saudi Arabia’s Oil-Fired Power Conundrum

Saudi officially plans to phase out power plant liquids-burn. But, with much of the country not connected to gas pipelines, oil-burn is here to stay. The kingdom has more oil-fired capacity under construction than the rest of the world put together.

Saudi Arabia is advancing a power generation strategy with considerable internal inconsistencies. On the one hand, Energy Minister Khalid al-Falih says “liquids burning in our utilities will be virtually eliminated” over the next decade. Meanwhile, the IEA’s Oil 2019 report released this week highlights that the kingdom has the largest amount of oil-fired power capacity under construction in the world.

If Mr Falih’s ambition is realized, the kingdom is therefore going to be left with a lot of white elephants.

The IEA says that “of the 11.1GW of fuel oil-fired capacity under construction today around the world, 8.5GW is in Saudi Arabia.” This actually underplays the trend as it pegs the 4GW Jazan plant at just 2.5GW – an earlier size that was subsequently upgraded ( MEES, 6 March 2015 ). Plugging in the expanded Jazan numbers puts the kingdom’s under construction oil-fired power plants at 10GW, out of a global 12.6GW, 79% of the global total. (CONTINUED - 933 WORDS)

DATA INSIDE THIS ARTICLE

chart Saudi Oil Burning*: Volumes Fell To Five-Year Low In 2018 With Fuel Oil Accounting For 55% Of The Total (‘000 B/D)