Saudi Arabia has hiked the price of gasoline, domestic gas for power generation as well as ethane feedstock in its 2016 budget as part of a broader program to cut subsidies and reduce its budget deficit.
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Gas prices have been increased to $1.25/MMBtu from $0.75/MMBtu, and ethane, the main feedstock for petrochemicals, to $1.75/MMBtu, up more than 100% from the long-standing fixed price of $0.75/MMBtu, the official Saudi Press Agency said late Monday.
The new prices take effect from Tuesday, SPA said.
The price of 95 RON gasoline was raised by 50% to Riyal 0.9 ($0.24)/liter, while that of 91 RON gasoline was raised by 66.67% to Riyal 0.75/liter.
The sharp increase was a surprise as the finance ministry said Monday that it would implement a "gradual" five-year program aimed at structural economic reform, including fuel price hikes, to improve energy efficiency.
State-owned Saudi Aramco has a total refining capacity of 2.91 million b/d across wholly owned and joint venture refineries in the country. It produced 115.57 million barrels of gasoline in 2014.
Most of this was, however, shipped overseas by their JV partners, leaving the country a net importer, with an average of 744,784 mt of gasoline imported each month this year, according to Joint Oil Data Initiative data.
Domestic fuels have been heavily subsidized, but Riyadh has been under pressure to bring its spending under control as its budget deficit in 2015 ballooned to Riyal 367 billion due to lower revenue from crude exports.
The country announced Monday a Riyal 513 billion budget for 2016, down from $229 billion in 2015.
The new budget, King Salman al-Saud's first since taking the throne in January, includes a spending of nearly $224 billion.
No details on the country's oil price assumption or crude export levels were disclosed.
(This version of the story corrects a typo in the second paragraph regarding the price of ethane per MMBtu.)
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