UPDATE 1-Saudi crude burn hits new records in June, July

Reuters Middle East

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DUBAI, Sept 19 (Reuters) - Saudi Arabia burned record

monthly volumes of oil in June and July, official government

figures show, contrary to the top crude producer's plan to

temper its summer oil burning spree this year with more gas.

The world's leading oil exporter burned an average of

743,500 barrels per day (bpd) of crude in June and July, up

82,000 bpd from the same months last year, mainly to make

electricity to keep the population cool, data issued under the

Joint Oil Data Initiative (JODI) showed on Wednesday.

The kingdom had hoped that more supply from Saudi gas fields

being made available for power generation would save millions of

barrels of valuable crude for export this summer.

In June it burnt an average of 778,000 bpd, 162,000 bpd more

than in June 2011.

Although there was a sharp fall from June to 709,000 bpd in

July, that still meant 3,000 barrels a day more went up in smoke

this July than in 2011 and much more than in any previous year.

Saudi Oil Minister Ali al-Naimi said in March it was a shame

to burn crude for power plants and that Saudi Aramco would boost

gas supplies for power plants this summer, with an extra 90,000

barrels of oil equivalent possibly available.

But one source familiar with the situation said that gas

availability turned out lower than hoped, forcing Aramco to find

alternative fuels to meet the summer surge in power demand as

temperatures in the kingdom surged to 45 degrees Celsius.

Some of that demand was met with fuel oil, but there was not

enough available, forcing Saudi Arabia, which sits on the

world's largest oil reserves, to burn around 5 million more

barrels of its biggest export earner over the two months than it

did last year.

A source close to Saudi Aramco said nearly a million barrels

were burnt on the highest demand days.

Saudi Arabia is by far the largest user of crude oil for

power generation, with most countries outside the Middle East

cutting back oil-fired power generation long ago in favour of

gas, nuclear and renewable energy sources.

The country's consumption of oil for power rose by an

implied 260 percent from 2004 to 2010, official figures show.

With crude output from Saudi oilfields constrained by OPEC

production limits, Saudi Aramco is searching for gas that can be

pumped independently to supply rapidly rising demand for

electricity.

Aramco now manages known gas reserves of 279 trillion cubic

feet, the fourth largest in the world, and hopes to increase its

gross gas production from 10.2 billion cubic feet per day (bcfd)

in 2010 to more than 15 bcfd by 2015.

It has raised output significantly over the past few years

but has not been able to keep up with rapidly rising demand,

driven by population growth and a boom in petrochemicals and

other industries which get priority access to any natural gas

available.

(Reporting by Daniel Fineren, Humeyra Pamuk and Reem

Shamseddine; Editing by Hugh Lawson)

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