Saudi Arabia’s Aramco, the world’s largest state-owned oil company, has announced plans to double the amount of power it can generate to about 4,000 megawatts by 2015. “Currently we have approximately 2,000 megawatts of generating power internally … we want … to go to 4 to 4.5 gigawatts depending on new facilities that are coming,” Ziyad al-Shiha, executive director of power systems at Aramco, said at an industry conference on Sunday.
The company needs to generate power to run the pumps and other machinery to bring crude up from underground. Al-Shiha said that the company wants to use co-generation to enhance the efficiency of the process. He noted that the OECD average power efficiency was just 39%; Aramco wants to be at 75% efficiency. Reuters reported, “Saudi Arabia may need to burn as much as 3 million barrels of oil a day by 2020 to generate power if it doesn’t improve efficiency, Al Shiha said. This would far exceed the 800,000 barrels of oil equivalent that the Ministry of Petroleum and Mineral Resources estimates the kingdom’s power plants use now.”
What is particularly interesting is that the Aramco power would not be part of the Saudi national power grid. Saudi needs to invest about $100 billion in the next decade for power generation, transmission and distribution. One wonders if the Aramco decision is simply a matter of business and finance, or does the company have doubts as to whether the government (worried about the Arab Spring coming to Saudi Arabia) will invest as it must. Having an independent power generating capacity would provide Aramco with an insurance policy against a government policy failure.