Saudi Aramco boss insists oil demand will grow for ‘the foreseeable future’

saudi oil rig

The world’s largest oil company has rubbished fears that a shift to low carbon sources could mean over a trillion dollars worth of oil assets are left abandoned ahead of the planned market float of Saudi Aramco next year.

Amin Nasser, the head of Saudi Arabia’s state energy giant, told a Paris conference that global demand for oil will continue to grow for the foreseeable future because the transition to new energy technologies, including renewables, will be “long and complex”.

“Oil demand will continue to grow in absolute terms at fairly healthy levels for the foreseeable future. It is why I believe ‘peak oil demand’ is not in sight for at least the next few decades. It is also why the notion of ‘stranded resources’ is not one I recognise,” he said.

Tackling concern that oil demand may peak sooner than expected is key for the oil titan as it drives forward plans for a stock market listing which could value Aramco at $2 trillion based on its enormous oil reserves.

Saudi Arabia produces around one in every nine barrels of oil produced globally and has proven reserves of 261.1 billion barrels of oil, as well as 297.6 trillion cubic feet of natural gas reserves.

The initial public offering represents an important step in transforming the country’s economy, which relies heavily on crude production and took a heavy hit during the recent market downturn.

Aramco has reportedly hired New York investment bank Moelis to work on its floatation which is expected in 2018 and is set to be the biggest listing in history.

Mr Nasser added that the oil industry must avoid letting short term concerns over the glut of oil in the market overshadow the need for long term investments in future supplies.

Oil companies have slashed spending on oil exploration and development in the wake of the almost three year oil market price rout, raising fears from the International Energy Agency that market oversupply could reverse into a global shortage by the end of the decade.

Mr Nasser said while the short-term market points to a surplus of oil, the supplies required for the years ahead are falling behind substantially because long-term investments are not being made.

“This presents a grave and growing threat to world energy security,” Mr Nasser said.

He urged the industry to focus on keeping a tight lid on the costs of producing oil and investing in technology which can minimise greenhouse gases from fossil fuels.

“If we can meet these challenges head-on, the stage is set for oil to remain a crucial part of the global energy mix for a long time to come,” he said.  

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