Saudi Aramco CEO Amin Nasser Says 'Abandon The Fantasy Of Phasing Out Oil And Gas'

Saudi Aramco CEO Amin Nasser has cautioned that the global energy transition is faltering and urged policymakers to adopt a more realistic approach to the future of oil and gas.

What Happened: Nasser, speaking at the CERAWeek by S&P Global energy conference in Houston, Texas, asserted that the current energy transition strategy is not yielding the expected results. He pointed out that the demand for fossil fuels is anticipated to continue growing, reported CNBC.

“In the real world, the current transition strategy is visibly failing on most fronts as it collides with five hard realities,” Nasser stated.

He proposed a “transition strategy reset,” suggesting that the focus should shift from phasing out oil and gas to investing in them adequately, based on realistic demand assumptions.

Nasser disputed the International Energy Agency’s (IEA) forecast of peak oil, gas, and coal demand by 2030, arguing that demand is unlikely to peak by then, especially in the developing world.

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"A transition strategy reset is urgently needed and my proposal is this: We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately reflecting realistic demand assumptions," the CEO said, according to the report.

He also highlighted the failure of alternative energy sources to replace hydrocarbons at scale despite significant global investments. Nasser emphasized the continued dominance of hydrocarbons in the global energy mix, with a mere 3% contribution from wind and solar energy and less than 3% from electric vehicles.

He attributed the majority of carbon emission reductions in the U.S. to the transition from coal to gas, emphasizing the importance of oil and gas security.

Why It Matters: Nasser’s remarks come when Saudi Arabia faces significant economic challenges. The country’s ambitious development projects have strained its finances, leading to unprecedented borrowing and potential stock sales in its crown jewel, Saudi Aramco.

The kingdom has also been considering raising $50 billion via a stock sale, which could be the largest offering in capital market history.

However, Saudi Arabia’s plans to list more shares of Aramco have been met with uncertainty, especially with the increasing concerns about the future of oil demand. In January, Aramco even halted its plan to increase its maximum crude production capacity amid this uncertainty.

With Nasser’s recent remarks, it is evident that Saudi Aramco, a key player in the global oil and gas industry, is facing significant challenges due to the uncertain future of oil and gas demand. This uncertainty could have far-reaching implications for the company’s future and Saudi Arabia’s economic stability.

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Saudi Aramco Photo by Piotr Swat on Shutterstock