Saudi Arabia needs to tame growth in its domestic oil and gas consumption, which are too big for both its population growth and the size of its economy, the central bank governor said.

"Data show that the kingdom's domestic consumption of oil and gas is posting continuing growth and at high ratios. It rose by an average 5.9 per cent over the past five years," Muhammad al-Jasser said in remarks carried by the official SPA news agency.

"This is a high growth percentage compared to demographic growth and Gross Domestic Product -- which gives cause for research into the causes of the increase in oil and gas consumption and work to rationalise it," Jasser added.

Annual population growth in Saudi Arabia, the world's top oil exporter, hovers around 1.8 per cent. Economic output grew by 0.6 per cent last year and the IMF expects it to rise by 3.7 per cent this year.

Jasser made the remarks during a meeting where he presented King Abdullah with the central bank's 2009 annual report.

The issue of rapidly-rising domestic demand for energy and the need to create more jobs and housing for Saudis were the three main challenges that Jasser said the kingdom needed to address.

State-controlled Saudi Electricity has said it used about 274,000 barrels per day for electricity production in 2009. Half the electricity production in the kingdom uses natural gas as a feedstock.

Abdullah al-Shehry, governor of the Electricity and Co-generation Regulatory Authority, has said that about a 10th of the kingdom's current oil production capacity, or 877,000 barrels per day, goes to the production of electricity.

Demand for electricity has been rising by an annual 8 per cent in recent years while a multi-billion dollar push to develop petrochemical production has further boosted demand for gas as a feedstock.

Electricity is being sold at giveaway prices to households, although prices for industrial users were increased in July.

Most of Saudi Arabia's gas output is associated with oil, so when it complies with oil production curbs agreed by Opec this also reduces gas production.

The kingdom plans to raise its production of unprocessed natural gas to 15.5 billion cubic feet per day (cfd) by 2015 from 10.2 billion cfd currently. – Reuters