Saudi Arabia expects to save a fifth of its energy use by 2030 through an efficiency drive designed to prevent domestic consumption from eating up oil for export, the kingdom’s new deputy oil minister said on Wednesday.
“Energy consumption is 4.2 million boepd (barrels of oil equivalent per day) currently and is expected to rise to more than 8 million boepd by 2030 if we don’t work hard to limit the big waste,” Prince Abdulaziz bin Salman told a conference.
The energy efficiency drive will save about 20 per cent of that projected consumption, or roughly 1.5 million boepd, said Prince Abdulaziz, who took the post after his father became king in January.
The world’s largest oil exporter heavily subsidises domestic fuel and utility costs, which encourages its growing population to consume more. This could ultimately interfere with oil supplies available for export.
Cutting subsidies and raising domestic fuel prices could deter excessive consumption, but Prince Abdulaziz gave no indication that this politically sensitive reform was likely.
“The real challenge is how will we achieve energy efficiency without changing the prices,” he said.
Rules introduced in the last few years require homes and businesses to install insulation and tighten standards for air conditioners. A fuel efficiency standard for cars will be binding by January 2016.
Standard Chartered wrote in a research note on March 30 that it expected long-term investment in Saudi Arabia’s power system and alternative sources of energy to reduce the need for burning crude oil.
In the short term, however, there may be little impact, and high temperatures this summer, which will trigger massive demand for air conditioning, are expected as usual to boost Saudi Arabia’s domestic oil use.
“In 2015 we expect the seasonal upswing in Saudi Arabia’s direct burn to perform the role of a market stabiliser, causing Saudi crude oil exports to fall back seasonally from their current high level,” Standard Chartered wrote.