Paris — Saudi Aramco President and Chief Executive Officer Amin H. Nasser said as the global oil market rebalances, the industry needs to avoid letting short term factors overshadow the need for long term investments.
Oil will play a key role in meeting future global energy demand despite scenarios of peak demand and stranded resources, which are misplaced, Nasser explained at the 18th International Oil Summit.
With the anticipated growth of the world’s population by an additional 2 billion people by 2050, overall demand for energy is expected to be substantially higher than it is today.
He stressed that this higher demand will be met through all energy sources and despite the progress being made, renewables still face multiple challenges of which both the industry and consumers alike should anticipate a long and complex energy transition.
‘Peak Oil Demand’ misplaced
“The conclusion is clear: oil demand will continue to grow … in absolute terms … at fairly healthy levels … for the foreseeable future. It is why I believe ‘Peak Oil Demand’ is not in sight for at least the next few decades. It is also why the notion of ‘Stranded Resources’ is not one I recognize,” he said.
Future energy demand is expected to be substantially higher than today, given the anticipated global population increase of 2 billion by 2050 — an increase that will be met through all energy sources. Despite progress being made, Nasser said renewables still face multiple challenges and industry and consumers alike should anticipate a long and complex energy transition.
Five key challenges
Industry leaders heard Nasser highlight five key challenges that warrant the most urgent attention in building broader industry resilience. The first is that all energy sources, especially oil and gas, will be required to meet a higher demand for energy because an estimated 30 million barrels per day of oil production capacity needs to be developed over the next five years due to global oil demand growth, the natural decline of legacy production, and recent sharp cuts in investment.
However, Nasser cautioned, short-term planning and volatility, combined with premature expectations of a rapid energy transition, are fueling uncertainty and are misleading.
“While the short-term market points to an oil surplus, the supplies required for the years ahead are falling behind substantially because the vast, long-term investments in proven and reliable energy sources are not being made. This presents a grave and growing threat to world energy security,” he added.
The second and third challenges, said Nasser, are cost and relentlessly questioning the basic building blocks of how the industry conducts its business, respectively. With price levels half of what they were before the downturn, the legacy cost structures are no longer sustainable, particularly as costs are starting to rise with increased activity, he said.
The fourth challenge, climate change, is also gaining significant importance. Nasser said Saudi Aramco is playing a key role in supporting the Kingdom’s contributions following the historic signing of the Paris Agreement, which Saudi Arabia ratified last year.
He cited one example of major oil and gas companies coming together through the Oil and Gas Climate Initiative (OGCI), which is making a $1 billion investment in developing innovative low-emissions technologies over the next decade.
The fifth and final challenge, said Nasser, is making real technological breakthroughs to deliver clean and sustainable energy over the long-term to minimize the greenhouse gas effects of oil and gas while the energy unfolds.
A call to action
He concluded his address with a call to action for the industry to be far more resilient “If we can meet these challenges head-on, the stage is set for oil to remain a crucial part of the global energy mix for a long time to come,” he said.
Photo caption： During the 18th International Oil Summit last week in Paris, Amin Nasser told industry leaders that oil demand will continue to grow at healthy levels for the foreseeable future. The summit offers a platform for dialog between oil producing and consuming countries.