Distinguished guests, ladies and gentlemen, good morning once again.
It is an honor to share this CEO Plenary Session with Chairman Wang, Patrick Pouyanné, and Peter Coleman.
As I said in my earlier remarks, our industry faces a crisis of perception with our stakeholders.
In this session, I want to explore how some of those misperceptions are playing out in China and in the wider Asia region; and what we are doing at Saudi Aramco to address them.
Obviously, one of the most important pillars of our industry’s relationship with China is our enthusiastic support for President Xi’s history-making Belt and Road Initiative.
Saudi Arabia has long seen this as a win-win, given our strategic location linking east with west; because infrastructure development and connectivity are at its heart; and because collaboration and integration are essential ingredients of success – just as they are with our own Vision 2030.
But in my view, the enormity of the energy equation has been underestimated by many stakeholders because of several misperceptions.
Let me highlight three.
First, the oil supply and demand theories of recent years have clouded the picture.
Just 10 years ago, the issue was peak oil supply.
People were convinced that the world was running out of oil fast while demand remained robust.
And we were confidently told that Saudi Aramco would have to produce 25 million barrels per day!
Today, that wild theory has been demolished, and in fact forgotten.
Now, some analysts see the opposite.
They see demand quickly collapsing while supply is abundant, which is why ‘stranded resources’ has become a fashionable term!
The truth is almost certainly somewhere in between.
But misperception has put a veil around it, directly threatening an orderly transition, a sustainable energy future, and energy security.
We need to help our stakeholders (including here in China and the wider Asia region) realize that oil and gas will remain vital to world energy for decades to come.
And we need to reassure them with our own long-term investments that the safety belt we have always provided is one they can continue to rely on.
Second, we acknowledge that battery electric vehicles will play an increasing role in people’s mobility.
But it also needs to be acknowledged that we are simply moving emissions from the car to the chimney until the electricity fuel mix becomes sufficiently clean.
Even 25 years from now, coal is still projected to make up half of that mix in major economies like China and India.
The world cannot wait that long if addressing climate change truly is the priority.
Yet this clouded thinking is preventing clear action that could make a real impact right now.
So what should we do in the interim?
At Saudi Aramco, we are determined to clear away the fog.
We are determined to use innovation and technology to lighten the carbon footprint of our fuel products so they are acceptable to society in the 21st century.
That is why we are:
building an international gas business;
delivering a zero-flaring program, including the elimination of methane gas emissions;
developing advanced engine and fuels technologies of the future;
investigating hydrogen-rich cleaner synthetic fuels, derived from oil;
doing pioneering work on CCUS;
and turning more crude oil directly into chemicals.
Furthermore, the upstream carbon footprint of our oil is among the lowest in the world, and has the lowest greenhouse gas intensity of any supplier of crude oil to China, thanks to our application of advanced reservoir management and very early adoption of Fourth Industrial Revolution technologies.
Even one of our oldest gas plants, at Uthmaniyah in Saudi Arabia’s Eastern Province, has become a leader in the use of Advanced Analytics and Artificial Intelligence solutions – cutting inspection time by 90%, reducing costs, and improving safety.
In fact, the World Economic Forum recently recognized the plant as one of its “Lighthouses” leading the way in the Fourth Industrial Revolution.
Third, many stakeholders have not kept pace with how oil and gas supply and trade flows are increasingly shifting from industrialized nations (whose oil demand is flattening) to the developing nations impacted by China’s Belt and Road. That is why we are building an energy bridge between Saudi Arabia and China that not only meets China’s growing needs for oil and gas but also chemicals, LNG, and lubes, and across the entire value chain.
But the true strength of the bridge is fast moving capital flows, dynamic energy partnerships, and strategic relationships built on mutual trust and shared visions.
We have our world-class integrated petrochemical refinery complex in Fujian Province, in collaboration with Sinopec and ExxonMobil.
Just last month, we announced the creation of a 10 billion dollar refining joint venture with Norinco and Panjin Sincen in Liaoning Province – the largest JV in China’s history with a foreign investor.
And as another sign of our deep and long-term commitment to China, our state-of-the-art Research Center here in Beijing is helping us to accelerate upstream, downstream, and climate management technologies.
I am proud to say it has attracted some of China’s brightest young researchers to these game-changing fields, and offers a template for attracting young talent more widely to our industry.
That work was given a tremendous boost last November. For the first time ever, Saudi Aramco came together with a major Chinese engine manufacturer, a major Chinese petrochemicals company, and a famous Chinese university to develop advanced fuel and engine technologies that will reduce emissions.
These are all examples of Saudi Aramco moving beyond a buyer-seller relationship to one where we can make significant contributions to China’s “high quality” growth and development.
They show how greater collaboration between the world’s largest energy producer and the world’s largest energy consumer is becoming irresistible.
And they illustrate the pragmatism returning to the debate as nations realize that all energy sources will be required for decades to come.
Ladies and Gentlemen, I am confident that by addressing the areas I have outlined this morning, we can mitigate the crisis of perception, and further strengthen our links, and along the entire length and breadth of the Belt and Road.
And by doing so we can place our industry at the heart of these nations’ future prosperity for decades to come, and help to mitigate the risks to energy security they would otherwise have to endure.
Finally, I am sure that this year’s IPTC will set new standards for next year’s event… which I am proud to say we will be hosting in Saudi Arabia for the first time ever, near our headquarters in Dhahran.
So I look forward to your questions, and seeing you in Saudi Arabia in January!