Saudi Arabia's Qassim Cement will switch to gas from crude burn at Buraydah

Saudi Arabia's Qassim Cement will partner with a Chinese engineering company to switch to natural gas in its cement operations from crude oil part of a wider effort to reduce crude burn in the country, according to an Aug. 14 statement on the Saudi stock exchange Tadwawul.

In partnership with Sinoma International, QACCO will switch the fuels at its production lines' kilns in Buraydah, Saudi Arabia, the company said.

Saudi Arabia aims to cut the use of some 1 million barrels of liquid fuels used domestically by 2030, opting for a mix of gas and renewable energy to allow for more crude exports from the world's biggest oil exporter.

Saudi Arabia's dependence on liquid fuel burn for power generation has been a target for transformation in recent years as summer power demand is rising while the country tries to diversify its economy from oil with more tourism and industrial growth.

Direct use of crude to sate summer power demand peaked in August 2024, reaching a nine-year high of 814,000 b/d due to extreme temperatures. S&P Global Commodity Insights analysis forecast crude burn to average 640,000 b/d this summer, down 10% from last year, and dropping further in 2026 as new capacities come into play.

Jafurah gas expansion

Commodity Insights forecasts Saudi crude burn will drop to 390,000 b/d in 2026 from a 2025 full-year average of 440,000 b/d, and the pace is expected to accelerate next year as the Jafurah unconventional gas project comes online by the end of 2025.

Saudi Aramco signed an $11 billion lease and leaseback deal for its Jafurah project with investors including Global Infrastructure Partners (GIP), a part of BlackRock. Announced on Aug. 14, the deal includes the formation of Jafurah Midstream Gas Company (JMGC), majorly owned by Aramco while GIP-led investors will hold 49% of the company's stakes.

The Jafurah gas basin is the largest non-associated gas development in Saudi Arabia, estimated to contain 229 Tcf of raw gas and 75 billion barrels of condensate. The gas project is set to be a "key" component to increasing gas production capacity by 60% between 2021 and 2030, Aramco said in its statement.

Several Saudi companies in the agricultural and industrial sectors have also begun the switch to gas and renewables to power their operations, allowing for a redirection of those barrels into Saudi Arabia's export markets.

Crude exports

While Saudi Arabia remains the largest exporter of crude oil in the world, diverting said barrels from direct use toward the global market would provide further economic growth as demand for funding grows along with its ambitions to diversify.

Crude exports in July dropped 8% to an average of 5.7 million b/d from 6.2 million b/d in June, with the July drop attributed to build-up of stockpiles as a precautionary measure during the Israel-Iran conflict, according to previous reporting by Platts, part of S&P Global Commodity Insights.

August crude exports are little changed from July as the summer peak season for crude burn is coming to an end and flows to Japan and South Korea are growing, according to latest ship tracking from S&P Global Commodities at Sea.