Saudi Arabia's Marafiq, a power and water utility firm, aims to generate 2,500 megawatt (MW) of power by 2014 to meet rising demand from industry in Yanbu, its chief executive told Reuters.

'We are adding 1,500 MW to our current production capacity which is about 1,000 MW so by 2014-2015 we should have 2,500 MW in Yanbu,' Thamer Al-Sharhan said s in an interview at Marafiq's headquarters in Jubail.

'Our plant in Yanbu... has been built in such a way that we can go up to a minimum of 2,800 MW so we are building the 750 (MW) right now and we will go by phases and we foresee in the next couple of years, one or two years we will update our forecast and probably launch another expansion,' Al-Sharhan added.     

Marafiq serves the two main industrial hubs in Yanbu and Jubail, home to petrochemical and refining facilities.

The Yanbu II project with a capacity of 750 MW of power and 60,000 cubic meters per day of water is estimated to cost 6 billion Saudi riyals ($1.6 billion). First power will start early 2014, Al-Sharhan said.

As for the existing Yanbu plant -- Yanbu I -- which is undergoing an expansion to increase the plant's capacity to 1,500 MW from 1,000 MW now, the first unit will be operational in April and commercial start-up is in July 2012.

A 2,750 MW independent water and power project (IWPP) in Jubail, on the east coast of Saudi Arabia was fully operational in 2010. The plant, can also produce 800,000 cubic meters per day of desalinated water. The off-taker is Tawreed, a fully owned subsidiary of Marafiq, which sells the entire power output to state-controlled Saudi Electricity Co (SEC).

Marafiq which provides potable, treated, processed water as well as waste water treatment services now has 16 billion riyals worth of active projects in the power and water sector.

'Maybe next year, subject to the approval of certain key customers we may need to expand by 75,000 cubic meter per day for an additional Reverse Osmosis (RO) unit in Jubail for desalinated water,' Al-Sharhan said.

The firm plans to spend gradually as much as 2 billion riyals on water projects, he added.

'I foresee we have potable old networks we are trying to replace, total project we may need to spend on network and addition. We are talking about 1.5 to 2 billion riyals for sea water system and for the potable water in Jubail.'      

The leading oil exporter is seeking to diversify its energy resources, turning to solar and eventually nuclear to reduce its need to burn fuel oil for electricity and so preserve its oil for lucrative export markets.

'I think the challenge will be the energy source, the availability of fuel to meet the demand for power generation and desalination. I look forward to see the development of technology of solar or nuclear that we can use for desalination purposes,' said Al-Sharhan.

Marafiq uses liquid fuels as feedstock in its Yanbu plant and natural gas in Jubail. Its main shareholders are the Royal Commission for Jubail and Yanbu, Saudi Basic Industries Corp (Sabic) , the Public Investment Fund (PIF) and Saudi Aramco. - Reuters