Oil executives meeting in Texas cast doubt on ‘fantasy’ energy transition
For some, it felt like the oil executive blurted the quiet part out loud.
“We have to give up the fantasy of phasing out oil and gas,” said Amin Nasser, head of what is by far the world’s largest oil producer, Saudi Aramco.
The energy transition was “visibly failing”, he added, saying predictions about impending demand for oil and gas were plainly wrong. The room, full of fossil fuel industry representatives at a conference in Houston, greeted the statement with applause.
Mr Nasser’s comments addressed widely differing views on the role fossil fuels will play in the global economy in the coming decades. Burning fossil fuels is the main cause of climate change.
The oil industry claims that its products, namely oil and natural gas, will play a dominant role in the coming decades. And with that in mind, they invest in new developments, especially in the field of gas.
On the other hand, the International Energy Agency, considered one of the leading authorities in the field, predicts that oil and gas demand will peak by 2030, as sales of renewable energy and electric vehicles will grow exponentially, spurred through incentives and subsidies. Just a few months ago, at the largest annual climate summit, negotiators from almost every country in the world agreed to “shift away from fossil fuels.”
In an interview with the Times last year, Fatih Birol, executive director of the IEA, said he thought people like Mr Nasser were not seeing the whole picture. “I have a friendly suggestion for oil executives: They only talk among themselves,” he said. “They need to talk to car manufacturers, to the heat pump industry, to the renewables industry, to investors, and see what they all think the future of energy looks like.”
However, Mr Nasser suggested in his speech in Texas this week that the IEA was the one who misread the markets by focusing too heavily on rich countries and ignoring the huge increase in energy demand expected in countries in Asia and Africa that have only just begun to grow. industrialize.
His response was essentially to ask whether the IEA thought oil and gas companies were throwing away their money by collectively investing trillions of dollars in increasing exploration, drilling and infrastructure. “It is unlikely that there will ever be a peak in oil and gas, let alone 2030,” Mr Nasser said at the CERAWeek by S&P Global conference. “It doesn’t seem like anyone is using the farm for that.”
Although they spoke less bluntly at the conference, the CEOs of Shell, Exxon Mobil and Brazil’s state oil company Petrobras echoed Mr. Nasser’s points. In an interview with the Times earlier this month, Petrobras CEO Jean Paul Prates said he sees Brazil’s oil production increasing in the coming decades.
Shell CEO Wael Sawan said his forecasts depend on fast-growing Asian markets. The same analysis supports last year’s forecasts by OPEC, the global oil cartel, about oil demand would not peak until 2045 at the earliest.
The White House sides with the IEA
“The head of Saudi Aramco said he thought the demand estimates from the IEA and others were wrong,” John Podesta, President Biden’s senior adviser on international climate policy, told reporters on Tuesday. “We don’t think so. We think there is a big demand for electrification.”
Even as electrification takes off in some sectors of the U.S. economy, U.S. exports of crude oil and liquefied natural gas reached record highs in 2023. Wind and solar energy currently provide less than 4 percent of the world’s energy. An even smaller percentage of vehicles produced are partly or fully electric.
Natural gas in particular has experienced enormous growth and is being included in the global energy trade on a larger scale than ever before. Fracking techniques have paved the way for the United States to become the world leader in gas production.
Traditional oil producers in the Persian Gulf – including Saudi Aramco – are also heavily involved in gas production, none more so than Qatar’s national oil and gas company, QatarEnergy. Their plans would allow them to overtake the United States’ production shortly after 2030. At a recent press conference, QatarEnergy CEO Saad al-Kaabi told reporters that “we still think there is a great future for gas in at least 50 years. ”
Even if oil demand starts to level off, companies will still need to make investments to avoid a decline in existing oil fields, says Patrick Pouyanné, CEO of TotalEnergies.
Without these investments, he argued, the energy markets that determine the prices people pay for a variety of basic needs would fluctuate wildly. Like the other oil executives, he did not see renewables and the electrification of transportation growing fast enough to replace existing demand for fossil fuels, let alone in countries with fast-growing populations and industries dependent on fossil fuels.
“The natural decline in oil fields is about 4 percent per year, so we will have to continue investing in oil and gas fields” to maintain current production levels, he said. “Otherwise the price will be high and people will be super angry.”