Saudi Arabia's capital city Riyadh is preparing to utilise gas, rather than oil, to generate electricity and to facilitate industrial production, according to a report.

The Arab News said that the move is part of the government's efforts to expand its gas network to the Central Province and other parts of the country.

Gas Distribution Company chairman Suleiman Muhammad Al Kholaify, quoted by the report, said the project Ñ to be launched early next year Ñ would cut the cost of fuel by 80 to 90 per cent.

"It will also lead to the establishment of new factories in the city, as it reduces the cost of production," he said in the report.

At present, gas is widely used in the Eastern Province for electricity and desalination plants and industries.

The availability of gas at competitive prices will boost industries specialising in transforming methane, ethane, propane, butane and benzene into value added products, the report said.

The development of gas also provides good opportunities for local contractors, it added.

The Saudi firms, in co-operation with international engineering companies, will take part in the construction of new industries either as main contractors or subcontractors for civil, mechanical, electrical, plumbing, safety, communication, maintenance and other works.

MacConnel Doyle Saudi Arabia Ltd, a company specialising in gas projects, is scheduled to complete the gas pipeline project by the beginning of next year to supply natural gas to the seventh electricity power plant and to the industries located in the second industrial city in Riyadh.

The project is estimated to cost SR25 million ($6.7 million).

Al Kholaify said the project would link the pipeline with Saudi Aramco's gas pipeline that comes from the Eastern Province.

In the first phase, the project would benefit 25 factories, he said, adding that more industries would make use of the facility in the future.

Al Kholaify emphasised the importance of using methane gas as it was clean and environmentally friendly and also gave high levels of heat economically.

Methane gas is used mainly in the iron and steel, building materials and chemical industries.