Policy makers need to look beyond this winter and stop vilifying the oil and gas industry if they are to prevent the next energy crisis, according to the CEO of the world’s largest oil company and largest crude oil exporter, Saudi Aramco.
Amin Nasser criticized the short-term emergency responses to the energy crisis in Europe and said that the short-term vision does not help energy supply or energy security at all.
The ongoing energy crisis, although intensified by the Russian invasion of Ukraine, did not start with the war, according to the senior Aramco executive. Years of underinvestment, lack of a back-up plan, and not ready alternatives to intensify and replace conventional energy are the real causes of this state of energy insecurity today, Nasser said in a speech at Schlumberger Digital Forum 2022 in Switzerland.
“Let me be clear: we are not saying that our global climate goals should change because of this crisis,” he said. However, the world and policymakers need a more credible energy transition plan, which must recognize that “large and affordable conventional energy supplies are still needed in the long run.”
Aramco’s Nasser reiterated Saudi Arabia’s long-held view that the world will need oil and gas for the foreseeable future and will need more investment in the sector just to keep supply constant amid declining oil production. maturing wells and even more investments to increase production capacity to meet world energy needs.
“Oil fields around the world are shrinking by an average of about 6% every year and more than 20% in some older fields last year. At these levels, simply keeping production stable requires a lot of capital per se, while increasing capacity requires a lot more, ”Nasser said.
Fossil fuels still account for more than 80% of global energy consumption and, with demand expected to increase at least this decade, insufficient investment in oil and gas supply will continue to be a cause for concern.
While many in the industry, including Aramco, have warned for years that insufficient investment would return to haunt global energy markets, many politicians in developed economies have ignored such warnings and bet on unrealistic renewable energy and energy transition plans, according to Nasser.
Investments in oil and gas more than halved between 2014 and 2021, Nasser said, adding that “This year’s increases are too small, too late, too short-term.”
“Meanwhile, the energy transition plan has been undermined by unrealistic scenarios and wrong assumptions because they have been misperceived as facts,” he noted.
“Because when oil and gas investors are ashamed, oil and coal power plants are dismantled, energy supplies (especially gas) cannot be diversified, they oppose LNG receiving terminals and refuse nuclear power, the transition plan better be right, ”Nasser said.
“Instead, as this crisis has shown, the plan was just a chain of sand castles that the waves of reality swept away. And billions of people around the world now face access to energy and the cost of living consequences that could be severe and prolonged, “she added.
Emergency measures to address the crisis in Europe are only short-term attempts to alleviate the pain of consumers and businesses without addressing the cause of the current crisis: planning an energy transition without first securing energy supply.
“Taking attention away from the real causes by questioning the morality of our industry doesn’t solve the problem,” said Aramco’s Nasser.
The EU’s plan to raise $ 140 billion (€ 140 billion) to cushion the blow of the energy crisis on European citizens and the economy is an attempt to resolve a crisis that has been brewing for years in the short term, he added. .
“Blocking or limiting energy bills might help consumers in the short term, but it doesn’t address the real causes and isn’t the long-term solution. And it is clearly not useful to tax companies when you want them to increase production, ”Nasser noted.
Calling for more investment in oil and gas, he added that “investing in conventional sources does not mean that alternative energy sources and technologies should be ignored”.
“This is the time to increase investment in oil and gas, especially capacity building. And at least this crisis has finally convinced people that we need a more credible energy transition plan ”.
By Cvetana Paraskova for Oilparmi
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