A latest report from the International Energy Agency (IEA) said that the growth and utilisation of renewable energy could make a dent on the oil expansion plans of countries like Saudi Arabia. The report said that several countries like Saudi Arabia and Iraq may see reduced usage of oil in the generation of power.
“The displacement of oil used in electricity generation will also play a major role in shifting global demand to a plateau. In particular, Saudi Arabia has plans that would see about 1 mb/d cut from direct crude, fuel oil and gasoil use in power plants by 2030. A large increase in utilisation of domestic gas and renewable resources would enable this. Iraq is also expected to reduce oil burn in power plants, albeit on a smaller scale,” the IEA report said.
The report said that the oil burn for power is set to change the geopolitical fossil trade from the Middle East. “Ambitious plans by Saudi Arabia and Iraq to cut the use of oil in power generation are projected to make a momentous contribution to taming global oil demand growth. Middle Eastern countries are estimated to have used 1.5 mb/d of oil to produce electricity in 2023, about 40% of the global total and one-sixth of overall regional oil consumption,” the report said.
The report said that fuel oil and direct crude burning each accounted for around 600 kb/d. “Much of this is concentrated in Saudi Arabia and Iraq, where it plays a crucial role in managing peak summer electricity demand. We estimate that this substitution in power sources, focused on new gas and solar capacity, will reduce the amount of oil used in generation by 1.1 mb/d by 2030,” the report said.
Saudi Arabia is currently the world’s largest consumer of oil for power generation but has announced plans that would end this dependency by 2030 in favour of natural gas and renewables. The Kingdom’s Liquid Fuel Displacement Program would eliminate approximately 1 mb/d of crude oil, fuel oil and gasoil use through a combination of incremental domestic gas resources, notably from the Jafurah project, and an enormous increase in renewables generation, the report said.
