Your Excellencies, Ladies and Gentlemen, good morning.
It feels very special to be back in Houston, in person, at last. And see partners and friends re-connecting, re-energizing, and re-examining the future of energy.
Before we look ahead, I would like to congratulate the WPC for recognizing the contributions of Dr. Dan Yergin with their highest honor – the Dewhurst Award.
And, if Dan will allow me, I would like to use the title of one of his books as the theme of my remarks today. Because, Ladies and Gentlemen, I believe our industry has a new quest before us.
Right now, the world is facing an ever more chaotic energy transition. Several highly unrealistic scenarios and assumptions about the future of energy are clouding the picture.
For example, it is increasingly assumed that the entire world can run on alternatives, and the vast global energy system can be totally transformed, virtually overnight.
Or that investments requiring roughly 115 trillion dollars will be made in less than 30 years. Most worrying of all is the assumption that the right transition strategy is in place.
It is not, it is deeply flawed.
Energy security, economic development, and affordability imperatives are clearly not receiving enough attention.
Until they are, and unless the glaring gaps in the transition strategy are fixed, the chaos will only intensify. So the urgent new quest for our industry is to chart a course that will continue to realistically meet the world’s rising energy needs – reliably, affordably, and sustainably.
This is not about changing our climate goals.
I know that everyone in this room, at Aramco, and across our industry, is fully committed to a net-zero economy.
And everyone on the planet has a vested interest in the ultimate goal of limiting temperature rise to well below two degrees.
It is about how we get there. Because, as President John Adams famously said, “Facts are stubborn things.”
There are several stubborn facts that need to be part of a credible transition strategy, and today I will share the top three.
The first is that alternatives are nowhere near ready to carry a big enough load, so new and existing energy sources will need to operate in parallel for a long time.
More than 99% of the world’s vehicle fleet is still conventional.
Despite a lot of good work underway, there are still no truly viable alternatives to conventional fuels in aviation, shipping, and even trucking. When it comes to petrochemical feedstock and lubricants, even the most aggressive transition plans still offer few alternatives.
And the combined share of solar and wind in the world’s primary energy mix is still less than 2%.
Do not mistake me – alternatives are making progress, and we welcome that. But their deployment at scale, across the world, will take a lot longer than is being assumed.
And it does not help when the pressure is mounting to stop all new investments in oil and gas. Across the industry, upstream capex fell by more than 50 percent between 2014 and last year, from 700 billion dollars to 300 billion.
Consequently, supplies have started to lag. This is also hurting spare oil production capacity, which is declining sharply. Yet this is happening against the backdrop of healthy demand growth.
Second, the rest of the world will not transition at the same speed as the developed world.
Because the developing world is where most of humanity lives, and most of the roughly 2 billion new energy consumers on the planet by 2050 will be living there too.
It is where more than 2.6 billion people still do not have access to clean cooking, and three quarters of a billion lack electricity. And it is where people aspire to ride on two wheels, not four.
So affordability is a real issue, and a one-size-fits-all strategy will not cut it in a multi-speed, multi-source transition.
Third, because oil and gas will be needed for decades to come, accelerating the reduction in their emissions is a strategic and urgent necessity for climate goals to be met.
We are not short of opportunities, such as:
- producing lower carbon products like blue hydrogen and blue ammonia.
- developing more efficient and lower emission internal combustion engines.
- leveraging non-combustible uses of oil such as non-metallic materials for construction, housing, automotive, solar, and wind.
- making the Circular Carbon Economy that G20 world leaders endorsed last year a reality.
And there is currently no credible course towards the climate goals that does not include Carbon Capture, Utilization, and Storage.
These are not empty words.
Some of the greatest climate protection can be added in these areas, in short order, without hurting those who can afford it least. Our industry has not been waiting for the starting gun.
But we must spare no effort to accelerate delivery. That would be a powerful display of walking the talk.
We can be change makers at the transition strategy and planning table, not noise makers. And it would demonstrate our fundamental role in people’s everyday lives for decades to come.
There is one more thing that can no longer remain unsaid.
A majority of key stakeholders agree with these realities as much as they believe in addressing climate change. We know this, because they say so in private.
They should say it publicly too. I understand their dilemma. Publicly admitting that oil and gas will play an essential and significant role, during the transition and beyond, will be hard for some.
But admitting this reality will be far easier than dealing with energy insecurity, rampant inflation, and social unrest if prices become intolerably high. And net-zero commitments by countries may start to unravel.
I do not have all the answers, no-one does. But I do know that stopping all new investments in oil and gas is not one of them.
I know that the world will only transition successfully if a stable, practical, and inclusive strategy is in place.
I know that we urgently need a process of genuinely global engagement that includes these stubborn facts in discussions, with all stakeholders playing their part.
And while there may be pushback on my remarks, I know that if we do not speak out as an industry, no-one else will on our behalf.
Ladies and Gentlemen, it is time for these stubborn facts to be heard loud and clear around the world before it is too late.
So let us embrace this urgent new quest as an industry, and accelerate our collective efforts in every domain.
For the sake of our planet, our economies, our investors, our shareholders, and billions of our consumers around the world.