Aramco to spend $300B as CEO frets about oil supplies
istanbul — Saudi Aramco, which plans what could be the world’s biggest initial public offering, will invest more than $300 billion over the next decade to maintain its spare oil-production capacity and explore for more natural gas, president and chief executive officer Amin Nasser said.
The outlook for oil supplies is “increasingly worrying,” with about $1 trillion in investments lost during the current industry downturn and fewer new deposits being discovered, Nasser said at a conference in Istanbul. Some estimates suggest that at least 20 million barrels a day of new output is needed over the next five years to offset rising oil demand and the natural decline of developed fields, he said.
“There seems to be a growing belief that the world can prematurely disengage from proven and reliable energy sources like oil and gas, on the mistaken assumption that alternatives will be rapidly deployed,” Nasser said in a speech on Monday. The petroleum industry will be at the heart of global energy for years, and the transition to use of alternatives will be “long and complex,’ he said. The state-run company known formally as Saudi Arabian Oil Co, the world’s biggest oil exporter, boosted production to an annual record last year before the kingdom led the Organisation of Petroleum Exporting Countries and other producers to curb output to stem a global glut. Aramco is also at the heart of the nation’s long-term strategy to wean its economy off oil. The government plans to sell about 5 per cent of the company in 2018 in what could be a record IPO.
Current oil prices won’t affect the company’s decision for a planned share sale, Nasser told reporters at the conference. Brent crude, the international benchmark, has slid 17 per cent this year and was 5 cents higher at $46.94 a barrel at 7.10am in London.
“Financial investors are shying away from making much needed large investments in oil exploration, long-term development, and the related infrastructure,” Nasser said in his speech, putting part of the blame on what he said were “misleading arguments about peak oil demand and stranded resources.”
The volume of conventional oil discovered around the world over the past four years, for example, is down more than 50 per cent from the previous four years, he said. — Bloomberg