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Page added on July 11, 2017

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Saudi Aramco Chief Predicts Oil Shortage as Investment Falters

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The world might be heading for an oil supply shortage following a steep drop in investments and a lack of fresh conventional discoveries, Saudi Aramco’s chief executive said on Monday.

Unconventional shale oil and alternative energy resources are an important factor to help meet future demand but it is premature to assume that they can be developed quickly to replace oil and gas, Amin Nasser told a conference in Istanbul.

“If we look at the long-term situation of oil supplies, for example, the picture is becoming increasingly worrying,” Nasser said.

“Financial investors are shying away from making much needed large investments in oil exploration, long-term development and the related infrastructure.  Investments in smaller increments such as shale oil will just not cut it,” Nasser said.

About $1 trillion in investments have already been lost since a decline in oil prices from 2014. Studies show that 20 million barrels per day of new production will be needed to meet demand growth and offset natural decline of developed fields over the next five years, he said.

“New discoveries are also on a major downward trend. The volume of conventional oil discovered around the world over the past four years has more than halved compared with the previous four,” Nasser said.

INFLECTION POINT

“A lack of investment is definitely not helping, so if that continues over the next couple of years there will be an inflection point where what we see today will have an impact on consumers at the end and supply will be impacted for the next couple of years,” Nasser told CNBC.

“What we need to see is more investments from various sectors to make sure there is an adequate supply over the long term,” he said to CNBC.

State oil giant Aramco, which is preparing to sell around 5 percent in itself next year in an initial public offering, is continuing to invest in maintaining its oil production capacity of 12 million barrels per day.

“We plan to invest more than $300 billion over the coming decade to reinforce our pre-eminent position in oil, maintain our spare oil production capacity, and pursue a large exploration and production program centering on conventional and unconventional gas resources,” Nasser said.

Nasser reiterated the IPO was on track for the second half of 2018.

Asked by CNBC if the current oil price will possibly delay the IPO, Nasser said the company’s investments are “geared towards the long term.”

“Even though we have the highest 260 billion of reserves we have the biggest exploration program,” he told CNBC.

Nasser said in his speech that one of Aramco’s priorities was “direct conversion of crude oil into petrochemicals” while adding the company was also focusing on solar and wind projects.

WSJ



7 Comments on "Saudi Aramco Chief Predicts Oil Shortage as Investment Falters"

  1. baha on Tue, 11th Jul 2017 8:34 am 

    Your money is better spent on solar

  2. Sissyfuss on Tue, 11th Jul 2017 8:59 am 

    This could be quite deleterious to the Ponzi scheme.

  3. q on Tue, 11th Jul 2017 10:20 am 

    A miracle – truth from Saudi crooks.

  4. MASTERMIND on Tue, 11th Jul 2017 12:44 pm 

    The last law of nature says: that any creature that despoils and outbreeds its natural habitat will be culled to bring its numbers under control and restore a stable environment.

  5. MASTERMIND on Tue, 11th Jul 2017 3:31 pm 

    Modern agriculture is the use of land to convert petroleum into food. Without petroleum we will not be able to feed the global population.”

    Professor Albert Bartlett, University of Colorado, USA

  6. Kenz300 on Thu, 13th Jul 2017 1:07 pm 

    The Saudis are using a large and growing portion of their oil reserves every year for internal power generation.

    They could sell this oil on the open market if they could free it up. That is why they are so interested in investing in solar power. Seem like solar power might just work in the desert.

  7. Fatima on Sat, 29th Jul 2017 5:53 pm 

    Saudi ARAMCO CEO will be in history books for not seeing what is coming next. Go read the “Demand Section” in this analysts report.

    https://www.perchingtree.com/saudi-aramco-ipo-key-risks-loom-for-investors/

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