The world’s biggest oil exporter, Saudi Arabia, has repeatedly said it wants to be the producer that pumps out the very last barrel of oil. In the meantime, the world and its growing economy will still need oil and gas, even as renewable energy capacity soars globally.
The rebound of economies from the 2020 COVID crisis has shown that not only is global oil demand not declining, but that there are only months left to reach and exceed pre-pandemic levels.
This weekend, Saudi Arabia again bemoaned underinvestment in oil and gas and said focusing only on renewables while campaigning against oil and gas was wrong.
“Net zero does not mean zero oil”
Insufficient investment in the oil and gas industry is hurting consumers, raising concerns about short-term supply shortages and creating challenges for policymakers, Saudi Energy Minister Prince Abdulaziz bin salman noted at the 2022 International Petroleum Technology Conference (IPTC) in Riyadh this weekend. Campaign against oil and gas investment is short-sighted, minister says, like the Arab News.
Focusing solely on renewable energy is a mistake, says the most influential oilman in the OPEC+ coalition.
“Net-zero does not mean foraging, net-zero does not mean zero oil,” he added.
Related: What ‘energy independence’ really means for the United States
The sharp decline in oil and gas investment has created a danger ‘that the world will not be able to produce all the energy it needs to promote recovery’, Prince Abdulaziz bin Salman noted at the conference, according to the Saudi Press Agency.
The Saudi minister also criticized the International Energy Agency (IEA) for its mixed messages, ranging from “never again new investment” last year to calls last week for more investment in oil and gas. gas amid the current energy crisis and soaring oil prices.
Saudi Arabia increases its oil production capacity
While the supermajors and US shale are not rushing to invest in new supplies, Saudi Arabia plans to increase its crude oil production capacity by 1 million barrels per day (bpd) within five years. Saudi oil giant Aramco aims to increase oil production capacity at 13 million barrels per day by 2027 compared to 12 million bpd currently.
“We are targeting our production capacity to reach 13.4, 13.5 million barrels per day by 2027,” Prince Abdulaziz Bin Salman told TIME’s Vivienne Walt. a maintenance released earlier this month.
“We believe that oil consumption will continue to increase. Oil demand will continue to grow. At what level, I don’t know, because the jury is out. Anyone who tells you they understand where, when and how many are definitely living in a fantasy land,” he said.
Thus, Saudi Arabia and its national oil giant Aramco are doubling their oil reserves, expecting robust global demand. The world’s largest oil exporter is doing its part to secure oil production capacity for the end of this decade, when chronic underinvestment in oil will have already impacted supply.
“We intend to remain the world’s leading producer,” said Yasir Othman Al-Rumayyan, chairman of the board of Saudi Aramco and governor of the Public Investment Fund, noted at the same conference in Riyadh this weekend.
Renewable energy sources depend on materials that can only be produced with hydrocarbons, Al-Rumayyan said, noting the influx of steel, diesel trucks and resin-coated blades in construction, transportation and l erection of a wind turbine, for example.
“So make no mistake, oil and gas is part of this transition. We have an essential role to play. And we intend to be in business for a very long time,” the Aramco chairman said.
“It is often assumed that the only thing holding back a net zero future is a lack of ambition. It’s wrong. Our industry is brimming with ambition. The truth is that there are still very complex technological challenges that we have not yet solved,” Al-Rumayyan added.
Underinvestment could create the next supply shortage shock
Throughout the net zero commitments and calls to ‘stay on the ground’ in recent years, Saudi Arabia has not changed its message to the energy industry: renewables are not enough. , underinvestment in oil and gas threatens to create supply shortages, and a hasty transition will lead to increased volatility and higher energy prices.
Over the past few months, the world has seen firsthand what fossil fuel shortages could look like. Government priorities have shifted from actions aimed at reducing emissions in the long term to cope with the immediate power shortagesoaring energy bills and ensuring short-term energy security.
Annual global upstream spending must increase by up to 54 percent to $542 billion if the oil market is to avoid the next supply shortage shock, Moody’s said last year.
Saudi Aramco CEO Amin Nasser noted that the World Petroleum Congress in Texas in December:
“Right now, the world is facing an increasingly chaotic energy transition. Several highly unrealistic scenarios and assumptions about the future of energy cloud the picture.
“Energy security, economic development and affordability imperatives are clearly not getting enough attention. Until they are, and unless the glaring flaws in the transition strategy are corrected, the chaos will only escalate,” the Saudi Aramco CEO noted.
Commenting on current commodity markets, Jeff Currie, Global Head of Commodities Research at Goldman Sachs, noted earlier this month that “It’s a molecule crisis. We’re running out of everything, no matter if it’s oil, gas, coal, copper, aluminum, you name it, we’re running out.
By Tsvetana Paraskova for Oilprice.com
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