Oil, gas to re­main key for ‘decades to come’: Aramco boss

Kuwait Times - - FRONT PAGE -

Oil and gas will re­main cen­tral to the world’s sup­ply of en­ergy for decades to come, the chief ex­ec­u­tive of gi­ant pro­ducer Saudi Aramco said yes­ter­day, urg­ing mar­ket play­ers to en­sure en­ergy se­cu­rity by bol­ster­ing fal­ter­ing in­vest­ment. Oil ma­jor bosses and en­ergy min­is­ters are meet­ing at the World Petroleum Congress in Istanbul, with the out­look clouded by the low price of crude oil, cur­rently trad­ing at around $45 a bar­rel com­pared with a peak of over 145 dol­lars in 2008.

This has driven down in­vest­ment to record lows, while oil ma­jors are also grap­pling with the new im­por­tance of un­con­ven­tional sources like shale and re­new­ables. The de­ci­sion an­nounced last week by Volvo to phase out pro­duc­tion of petrol-only cars from 2019 in fa­vor of elec­tric has also sent rip­ples of con­cern around the in­dus­try. The chief of the Saudi Ara­bian en­ergy gi­ant, Amin Nasser, said that there is “wide­spread agree­ment” that even as the world moves to greater use of re­new­ables over fos­sil fu­els, “petroleum will con­tinue to be the heart of the en­ergy mix.”

He said that while “ex­pec­ta­tions for al­ter­na­tives are through the roof”, his­tory shows that en­ergy tran­si­tions to dif­fer­ent sources tend to be “long and com­plex pro­cesses”.

“The re­new­ables still have ma­jor chal­lenges, they do not com­pete with oil. It takes a long time for new fu­els to seize mar­ket share,” he said, not­ing that elec­tric cars would also still need time to take off. With the global econ­omy forecast to grow sharply as pop­u­la­tions in­crease, he said it is a “mis­taken as­sump­tion that al­ter­na­tives will be rapidly de­ployed”. “Ris­ing de­mand for all sources of en­ergy - with oil and gas at the heart of the mix - will be the re­al­ity for decades to come,” he said.

But he warned that the tens of bil­lions of dol­lars lost in de­ferred and can­celled in­vest­ment since the cur­rent spate of low oil prices be­gan risked harm­ing con­sumers in the long-run. “Fi­nan­cial in­vestors are shy­ing away from mak­ing much-needed in­vest­ment,” Nasser said, warn­ing that with­out higher in­vest­ment lev­els “en­ergy tran­si­tion and en­ergy se­cu­rity may be fa­tally com­pro­mised”. “New dis­cov­er­ies are also on a ma­jor down­ward trend,” Nasser added, urg­ing in­dus­try play­ers to cre­ate a “com­pelling nar­ra­tive” for in­creased in­vest­ment.

The down­turn has blown a ma­jor hole in the bud­gets of key OPEC and non-OPEC pro­duc­ers, re­liant on ro­bust oil prices for healthy fi­nances. Nasser con­firmed that to counter the slid­ing in­vest­ment trend, Saudi Aramco plans to in­vest some $300 bil­lion in the com­ing years and was also look­ing at di­ver­si­fy­ing its own busi­ness. “The con­tin­u­ing mar­ket volatil­ity is a pow­er­ful re­minder that we must trans­form our own busi­ness model,” he said. Nasser said that by 2030 Saudi Ara­bia should be “noth­ing less than a pow­er­house” for so­lar power and Aramco would play a full part in this.

The chief ex­ec­u­tive of Royal Dutch Shell, Ben van Beur­den, said the sec­tor faced a huge chal­lenge in the years to come, need­ing to meet “higher en­ergy de­mands for a grow­ing pop­u­la­tion” while also re­duc­ing green­house emis­sions in line with the Paris Agree­ment on com­bat­ing cli­mate change. He hailed the fact there have al­ready been “huge ad­vances” in the field of re­new­ables, with costs pre­dicted to fall fur­ther for wind and so­lar en­ergy. — AFP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.