In his keynote speech at the Schlumberger Digital Forum, Nasser warned that as Europeans face a colder winter, “the warning signs in global energy policies were flashing red for almost a decade.”
“Many of us have been insisting for years that if investments in oil and gas continued to fall, global supply growth would lag behind demand, impacting markets, the global economy, and people’s lives,” Nasser said.
He warned that although oil and gas investments have currently accelerated from the crash of more than 50% between 2014 and 2021 from $700 billion to over $300 billion, they “are too little, too late, too short-term.”
He maintains that the energy transition plan has been undermined by unrealistic scenarios and flawed assumptions “because they have been mistakenly perceived as facts.”
“For example, one scenario led many to assume that major oil use sectors would switch to alternatives almost overnight, and therefore oil demand would never return to pre-Covid levels.”
However, he said these predictions were misguided as world economies began to emerge from lockdowns and gas and oil consumption experienced a sharp rebound.
“By contrast, solar and wind still only account for 10% of global power generation and less than 2% of global primary energy supply. Even electric vehicles comprise less than 2% of the total vehicle population and now face high electricity prices,” he said.
He noted that contingency planning also played a very significant role in the recent energy crisis by excluding the hydrocarbon and nuclear sectors.
“Because when you shame oil and gas investors, dismantle oil- and coal-fired power plants, fail to diversify energy supplies --especially gas--, oppose LNG receiving terminals, and reject nuclear power, your transition plan had better be right,” he said.
-Capping energy bill offers only short-term relief
Nasser said although the conflict in Ukraine has intensified the effects of the energy crisis, it argues it is not the root cause.
“Sadly, even if the conflict stopped today, as we all wish, the crisis would not end. Moreover, freezing or capping energy bills might help consumers in the short-term, but it does not address the real causes and is not the long-term solution,” he warned.
He was also critical of taxing energy companies’ production increases, which he said are needed, and without which the energy crisis would worsen.
He argued that the EU plan to promote renewables technologies to reduce dependency on fossil fuels would only set up another set of dependencies.
These “distorted energy policies” are now leading to a rise of carbon-intensive energy resources, including coal, as investments in less carbon-intensive gas have been ignored and contingency planning disregarded, he said.
He highlighted the fear factor that has emerged in long-term oil and gas investments, resulting in their shrinkage.
“When the global economy recovers, we can expect demand to rebound further, eliminating the little spare oil production capacity out there. And by the time the world wakes up to these blind spots, it may be too late to change course,” he warned.
Nasser vowed that Aramco would increase oil and gas investments as the world needs a more credible energy transition plan.
He confirmed that the company plans to increase its oil production capacity to 13 million barrels per day by 2027.
“We are also growing our gas production, potentially increasing it by more than half through 2030 with a mix of conventional and unconventional gas,” he added.
(Anadolu Agency, September 20, 2022)