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Saudi Electricity to use gas for 1,800 MW plant

Saudi Arabia aims to increase gas production.

August 16, 2010 10:52 by

State-controlled Saudi Electricity Co (SEC) will use 300 million cubic feet per day (cfd) of gas to fire its planned 1,800 megawatt al-Qurayah power plant, a company executive said on Sunday.

The plant had previously been expected to use heavy fuel oil as a feedstock.

Apart from being more environmentally friendly, gas also means the plant can be fully on line in 2014, slightly earlier than for an oil-fired plant.

SEC secured the gas allocations it needed to fire the plant in al-Qurayah, south of the eastern city of Khobar, Amr Al-Swaha, head of independent power producer (IPP) projects, said.

“We managed to get the gas, therefore we changed,” Swaha told Reuters by telephone.

The plant is estimated to cost between $2 billion to $2.5 billion and if using fuel oil, had been expected to be brought on line in two phases in 2014 and 2015, Swaha said.

The Middle East is sitting on 40 percent of the world’s gas reserves and yet is suffering from a supply shortage. The only country in the Gulf with gas to spare is Qatar. The rest of the region would burn more if it could.

In Saudi Arabia, the world’s leading oil exporter, most of its gas output is associated with oil, so when it limits production in line with OPEC curbs, that also curbs gas supplies.

It is, however, striving to shift the focus to gas to meet rising domestic demand for power and the expansion of its petrochemicals industry.

The kingdom has set a target of increasing the production of raw gas — unprocessed natural gas — to 15.5 billion cfd by 2015 from 10.2 billion cfd now.

Al-Qurayah is the third of six planned IPP power plant projects, which involve the private sector. In total, the projects should add 11,000 MW of capacity.

Saudi Electricity will buy all the power produced by the plant from the winning consortium, which will run it on a build-own-operate basis.

The request for proposals, expected to be issued by the end of September, will determine the final quantities of gas, the capacity of the plant, and the start-up date, Swaha said.

(Reporting by Reem Shamseddine; editing by Barbara Lewis)

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