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Aramco boss with new energy manifesto for oil says we should forget energy transition

In a candid address at the CERAWeek by S&P Global energy conference in Houston, Texas, Saudi Aramco’s CEO, Amin Nasser, delivered a stark critique of the world’s current energy transition strategy, deeming it a failure and advocating for a significant strategy shift. Amidst global calls for the phase-out of fossil fuels, Nasser argued for a more pragmatic approach that acknowledges the enduring demand for oil and gas.

Highlighting the stark reality of energy demands and consumption patterns, Nasser pointed out the inadequacy of current strategies to meet global energy needs. He criticized the existing transition plans, which he believes are not only unrealistic but are also proving to be ineffective as they clash with the practicalities of global energy demands.

“The transition strategy reset is urgently needed,” Nasser stated, emphasizing the necessity to move away from the “fantasy” of eliminating oil and gas dependency. Instead, he proposes a recalibrated approach that focuses on reducing emissions from existing hydrocarbon sources while realistically bolstering investment in oil and gas to match demand projections.

Nasser’s comments come in the backdrop of the Paris-based International Energy Agency’s forecast, which anticipated a peak in oil, gas, and coal demand by 2030. Contrary to these predictions, Nasser argued that demand is far from reaching its zenith, particularly highlighting the role of developing nations in driving future oil and gas consumption.

Despite over $9.5 trillion invested in alternative energy over the past two decades, wind and solar energy account for less than 4% of the world’s energy supply, with electric vehicle penetration under 3%. Meanwhile, the global energy mix has seen a negligible shift from hydrocarbons, dropping merely from 83% to 80% since the turn of the century.

Nasser underscored the growth in natural gas consumption, which has risen by 70% since 2000, crediting it for two-thirds of the carbon emission reductions in the United States. This observation starkly contrasts with the narrative that renewables alone can meet future energy demands.

The Aramco CEO also pointed out the disproportionate focus on demand in developed markets, neglecting the burgeoning energy needs of the global south. These regions, home to over 85% of the world’s population, receive a fraction of renewable energy investments.

In his concluding remarks, Nasser advocated for a balanced energy transition that phases in new sources and technologies based on their readiness, economic viability, and infrastructural support. He stressed the importance of improving efficiency in oil and gas production, which has already contributed significantly to reducing global energy demand, and called for an increased focus on emission reduction across all energy sectors.

As global leaders navigate the complex path of energy transition, Nasser’s insights offer a sobering reminder of the challenges and realities that lie ahead. His call for a strategy reset resonates with the need for pragmatic and inclusive approaches to secure a sustainable energy future. However, according to the 2023 World Energy Outlook report, the share of coal, oil and natural gas in global energy supply – stuck for decades around 80% – starts to edge downwards and reaches 73% in the STEPS by 2030 as China’s economy slows down by 3.3% by the same time.

Sources: IEA, CNBC

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