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Saudi oil demand boom may squeeze global supply

July 20/2011

(Arabian Oil and Gas) -- Saudi Arabia is commonly regarded as the world's swing producer of oil, with proven crude reserves of 264.5 billion barrels and production of around 9.7 million barrels of oil per day (bpd). However, a report in the Financial Times says the Kingdom's burgeoning domestic demand for oil, especially for electricity generation, may seriously restrict it's ability to continue to stabilise prices by increasing exports.


Saudi is already the world's sixth largest oil consumer, with domestic oil demand rocketing by 75% in the ten years to 2011. Domestic oil consumption is slated to rise by 5.6% this year from it's current rate of 2.81 million bpd.


Power generation in Saudi is particularly oil-intensicve as plants typically burn heavy crude, rather than refined oil.


Saudi is starting to expand it's gas exploitation, with Karan, the Kingdom's first non-associated gas field, beginning production now.  However, oil looks set to remain the core energy source for electricity generation for several years.


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