Saudi Aramco, the largest oil company on the planet, believes that it is necessary to look into the future beyond the coming winter, and call for an end to the demonization of the oil and gas industry, if, of course, humanity wants to avoid a new energy crisis.
The head of Aramco, Amin Nasser, writes Oil Price, criticized at the Schlumberger Digital Forum 2022 in Switzerland how Europe is dealing with the energy crisis. In his opinion, Brussels adopted a short-term strategy in vain, because it will in no way help the growth of hydrocarbon production and strengthen energy security.
Aramco recalls that the current energy crisis began even before the events in Ukraine, although, of course, they intensified it. According to Arabian oilmen, the main causes of the crisis are years of weak investment in the oil and gas sector, the lack of a back-up plan and the unwillingness of renewable sources to replace fossil fuels, which now account for more than 80% of the energy mix.
Nasser repeated the main idea that has been defended in Riyadh for more than a year – the planet cannot do without oil and gas in the foreseeable future. To maintain a stable supply of hydrocarbons, much more investment in the industry is needed than in recent years. Otherwise, it will not be possible to satisfy the growing demand for oil and gas.
“Oil deposits on the planet are being depleted at an average rate of approximately 6% per year,” said Amin Nasser. “Moreover, the rate of depletion of a number of old fields is more than three times higher and exceeds 20%. At this rate, even just keeping production at the same level requires huge investments. To increase production, much more funds are required.”
The oil industry has been warning for years that underfunding the industry could end badly, and it looks like they were right. However, many politicians in developed countries have ignored all warnings in recent years. They didn’t want to hear anything about fossil fuels and only talked about renewables.
In 2014-21, according to Nasser, investment in the oil and gas industry fell by more than half.
“The growth (of investment) this year,” he said, “is too small, too late, and too short.”
As for the transition to clean energy, its supporters made many mistakes, as a result of which plans to abandon fossil fuels turned out to be unrealistic. Nasser likens plans to switch to renewable sources to sand castles, which are notoriously fragile and short-lived. As a result of their implementation, billions of people around the planet are now faced with energy shortages and astronomical prices for it.
Attempts to control the energy crisis in Europe are short-term and aimed at easing the “pain” of the population and business, but do nothing about the causes. The main one is the beginning of the energy transition without ensuring a stable supply of energy carriers.
“Attempts to divert attention from the real causes (of the crisis) by calling into question the morality of the (oil and gas) sector will in no way help to solve the problems,” Amin Nasser emphasized.
Nasser, for example, considers the recently developed European Commission plan to withdraw 140 billion euros of excess profits from energy companies and transfer them to the population and businesses to mitigate the consequences of the energy crisis as such a short-term measure. These and other measures of Brussels, the head of Aramco is convinced, provide temporary relief, but do not solve the main problems. He considers it at least illogical and inefficient to invent additional taxes for energy companies and at the same time require them to increase production.
Criticizing the policy of the authorities, Amin Nasser said that his call to increase investment in the oil and gas sector does not mean that he calls to forget about renewable energy sources and new technologies.
“At least this crisis has finally convinced everyone that we need a more realistic plan for the transition to clean energy,” said Amin Nasser, head of Saudi Aramco, in his speech.