Saudi Arabia’s Gas Push Pays Off as Production Hits Record
(Bloomberg) -- Saudi Aramco’s greater focus on developing natural gas resources paid off with record daily output of the fuel -- but it still wasn’t enough to keep the kingdom’s power plants supplied when they needed it most.
Saudi Arabia consumes all the gas it produces, much of it to generate electricity. Because gas pollutes less than crude, power plants prefer it as fuel.
Aramco pumped a record 10.7 billion cubic feet of gas on Aug. 6, the state energy company said in its third-quarter results on Tuesday, without giving an average figure for the period. Yet crude use at Saudi power stations also peaked that month. The country burned 702,000 barrels a day in August, according to the Joint Organisations Data Initiative, the most in four years.
Saudi Arabia is the world’s biggest oil exporter, but it’s also well-endowed with gas. The desert nation holds the eighth-largest gas reserves, and its production last year ranked ninth worldwide, according to BP Plc data.
However, it’s been slow to exploit this wealth, unlike neighboring Qatar, the biggest exporter of liquefied natural gas. Qatar pumped 17 billion cubic feet a day of LNG last year, according to BP. While Aramco started capturing so-called associated gas at oil fields in the 1970s, it’s only recently developed gas-only deposits.
Electricity consumption in Saudi Arabia soars in July and August, when citizens and residents crank up air-conditioners to cope with temperatures that can exceed 122 degrees Fahrenheit (50 degrees Celsius). The country came under extra pressure this year as it curbed crude production to fulfill its obligations under OPEC’s oil-cuts accord with allies such as Russia. This reduction squeezed Saudi supplies of associated gas.
At the same time, Saudis and expatriate residents canceled overseas vacation plans due to the coronavirus pandemic, boosting electricity demand at home.
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