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Aramco CEO Nasser: Peak oil demand scenario misplaced

Aramco CEO Nasser: Peak oil demand scenario misplaced thumbnail

SAUDI Aramco President and Chief Executive Officer Amin H. Nasser has said that 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 in Paris, Thursday. 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. “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. Nasser highlighted five key challenges which deserve the most urgent attention in building broader resilience.

First is that all energy sources will be required to meet higher demand for energy, especially oil and gas, 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, natural decline of legacy production and recent sharp cuts in investment. However, Nasser cautioned that short-termism and volatility, combined with premature expectations of a rapid energy transition, is fueling uncertainty and misleading markets and investors. While the short-term market points to a 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 said. The second and third challenges are cost, and relentlessly questioning the basic building blocks of how the industry conducted its business, respectively. Nasser said 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. The fourth challenge is also gaining significant importance – climate change. 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 is through the Oil and Gas Climate Initiative (OGCI), which is making $1 billion investment in developing innovative low emissions technologies over the next decade. The fifth and final challenge, according to Nasser, is making real technological breakthroughs to deliver clean, sustainable energy over the long-term that includes technology which will minimize the greenhouse gas of oil and gas while the energy unfolds. 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.


6 Comments on "Aramco CEO Nasser: Peak oil demand scenario misplaced"

  1. Apneaman on Sun, 16th Jul 2017 11:28 pm 

    The Mighty U.S. Shale Oil Industry To Lose Another $20 Billion In 2017

    “Well, it looks like the U.S. shale oil industry is going to chalk up another lousy year of financial losses in 2017. This shouldn’t be a surprise as the U.S. shale oil industry hasn’t made any real money since 2008. However, I still read articles suggesting that the United States will still become energy independent by ramping up its Mighty Shale Oil Machine.

    Unfortunately, the country’s shale oil industry will never allow the United States to become energy independent, but it will sure go BROKE trying to do so.”

  2. Apneaman on Sun, 16th Jul 2017 11:32 pm 

    Oil majors face downgrades if crude prices don’t pick up: S&P

    “S&P currently has downgrade warnings – or negative outlooks in rating agency parlance – on ExxonMobil XOM.n, Chevron Corp (CVX.N) and Total (TOTF.PA), while the other so-called ‘majors’ include Royal Dutch Shell (RDSa.L) and BP (BP.L).

    “If oil prices persistently trend below our price assumptions ($50/bbl on average until the end of 2018), downgrade pressure for many ratings would increase without material and sufficient further cost and capex efficiencies, disposals, or other countermeasures against weak credit metrics for a sustained period,” S&P said in a report.”

    “Oil majors’ debt levels have ballooned with aggregate debt reaching nearly $300 billion in 2014, up from just under $200 billion in 2009 according to S&P’s estimates.”

  3. Shortend on Mon, 17th Jul 2017 12:34 am 

    That can only mean one thing…the stock price will increase for all the Oil majors…right Cog?…Man, is this a wackie world…when it tumbles down I’ll have a front seat here in South Florida….

  4. boat on Mon, 17th Jul 2017 4:26 am 


    The US used to import 12 mbpd, now days around net 5 mbpd. Of course you doomer types frame that as a lack of energy independence. Lol Let’s keeping watching that net import number as it keeps dropping over the next decade.

  5. Makati1 on Mon, 17th Jul 2017 5:03 am 

    Boat, you might want to check your numbers…

    This site says that the US imported 10.2 million bbls/day of crude oil and products, (not 5 million) as of April this year.

    Another site is just crude oil but it too is above 5 mbbl/day at 7.742 mbbl/day.

  6. Kenz300 on Mon, 17th Jul 2017 12:28 pm 

    We are moving to a clean energy future faster than fossil fuel companies and countries realize.
    Clean energy production with solar panels / tiles and battery storage.
    Clean energy consumption with electric vehicles. No emissions.
    A new solar roof, battery storage, an electric car charger and an electric vehicle.
    Solar panels are now being projected to have a much longer life than just a few years ago.

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