RIYADH, SAUDI ARABIA – Oil giant Saudi Aramco’s chief blasted “unrealistic” energy transition plans, calling for a “new global energy consensus”, including ramped-up investments in fossil fuels to address painful shortages.
Speaking at a conference in Switzerland, Amin Nasser, head of the world’s biggest crude producer, lamented a “deep misunderstanding” of what caused the current energy crunch and said a “fear factor” was holding back “critical” long-term oil and gas projects.
“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.
“Instead, as this crisis has shown, the plan was just a chain of sandcastles that waves of reality have washed away.
“And billions around the world now face the energy access and cost of living consequences that are likely to be severe and prolonged.”
Saudi Aramco last month unveiled record profits of $48.4 billion in the second quarter of 2022, after Russia’s invasion of Ukraine and a post-pandemic surge in demand sent crude prices soaring.
Yet even as it benefits from the current energy crisis, Riyadh has long complained that focusing on climate change at the expense of energy security would further fuel inflation and other economic woes.
With consumers and businesses in Europe facing soaring bills as winter approaches, the causes of the crisis run deeper than the Ukraine war, Nasser said Tuesday, asserting that the warning signs were “flashing red for almost a decade”.
They include declining oil and gas investments dating back to 2014 and flawed models for how quickly the world could transition to renewable sources, he said.
The “energy transition plan has been undermined by unrealistic scenarios and flawed assumptions because they have been mistakenly perceived as facts”, Nasser said.
His proposed “new global energy consensus” would involve recognizing long-term needs for oil and gas, enhancing energy efficiency and embracing “new, lower-carbon energy” to complement conventional sources.
Nasser nonetheless said there should be no change in global climate goals.
Earlier this month OPEC+ cartel agreed to cut production for the first time in more than a year as it seeks to lift prices that have tumbled due to recession fears.
Long-term, Saudi Arabia plans to increase daily oil production capacity by more than one million barrels to exceed 13 million by 2027.
Crown Prince Mohammed bin Salman has also tried to make environmentally friendly policies a centerpiece of his reform agenda.
Last year, Saudi Arabia pledged ahead of the COP26 climate change summit to achieve net zero carbon emissions by 2060, sparking skepticism from environmental campaigners.
Saudi Aramco has pledged to achieve “operational net-zero” carbon emissions by 2050.
That applies to emissions that are produced directly by Aramco’s industrial sites, but not the CO2 produced when clients burn Saudi oil in their cars, power plants and furnaces.