Dealing with the Saudi energy conundrum
"Another month, another report that claims Saudi Arabia's economy is hurtling towards the edge of a cliff. The latest research, from Citigroup, has warned that the kingdom risks becoming a net oil importer by 2030. This worrying prediction is based on the fact that Saudi Arabia already consumes over a quarter of its oil production domestically, as well as all of its gas production. Peak electricity demand is soaring at around eight percent per annum, with oil and its derivatives providing almost half of electricity in the country. Citigroup believes that the loss to the Saudi economy due to using its oil instead of exporting it amounted over $80bn in 2011 alone. To make matters worse, Saudi Arabia is selling off its energy supplies at highly subsidised rates; local power providers pay between $5 and $15 per barrel of oil (compared to Brent prices of $115 at the moment) while petrochemicals firms benefit from cheap gas feedstocks to outperform their international peers."
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