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World Heading For an Oil Supply Shortage – Saudi Aramco CEO

Amin al-Nasser, president of state oil giant Saudi Aramco, delivers a speech on October 11, 2016 during the 23rd World Energy Congress in Istanbul. World Energy Congress in Istanbul brings together players across the energy sector to discuss a transformation of the sector. Saudi Arabia said on October 10 it was "not unthinkable" that the price of crude oil could surge to $60 a barrel by the end of the year but warned against drastic production cuts that might shock markets. / AFP PHOTO / OZAN KOSE
  • World might be heading for an oil supply shortage following a steep drop in investments and a lack of fresh conventional discoveries
  • Unconventional shale oil and alternative energy resources are an important factor to help meet future demand but it is premature to assume that they can be developed quickly to replace oil and gas
  • “If we look at the long-term situation of oil supplies, for example, the picture is becoming increasingly worrying”
  • “Financial investors are shying away from making much needed large investments in oil exploration, long-term development and the related infrastructure. Investments in smaller increments such as shale oil will just not cut it
  • About $1 trillion in investments have already been lost since a decline in oil prices from 2014
  • Studies show that 20 million barrels per day of new production will be needed to meet demand growth and offset natural decline of developed fields over the next 5 years
  • “New discoveries are also on a major downward trend. The volume of conventional oil discovered around the world over the past four years has more than halved compared with the previous four”
  • “A lack of investment is definitely not helping, so if that continues over the next couple of years there will be an inflection point where what we see today will have an impact on consumers at the end and supply will be impacted for the next couple of years”
  • “What we need to see is more investments from various sectors to make sure there is an adequate supply over the long term”
  • There is “widespread agreement” that even as the world moves to greater use of renewables over fossil fuels, “petroleum will continue to be the heart of the energy mix”
    • While “expectations for alternatives are through the roof”, history shows that energy transitions to different sources tend to be “long and complex processes”
    • “Rising demand for all sources of energy, with oil and gas at the heart of the mix, will be the reality for decades to come
  • Aramco, which is preparing to sell around 5% in itself next year in an IPO, is continuing to invest in maintaining its oil production capacity of 12 million barrels per day
  • “We plan to invest more than $300 billion over the coming decade to reinforce our pre-eminent position in oil, maintain our spare oil production capacity, and pursue a large exploration and production program centering on conventional and unconventional gas resources”
  • Nasser reiterated the IPO was on track for the second half of 2018
  • “Even though we have the highest 260 billion of reserves we have the biggest exploration program”
  • Nasser said that one of Aramco’s priorities was “direct conversion of crude oil into petrochemicals” while adding the company was also focusing on solar and wind projects

Amin H. Nasser is the president and CEO of the Saudi Arabian Oil Company (Saudi Aramco), the world’s leading integrated energy and chemicals enterprise, and the largest provider of crude oil to global markets.

Reuters – Aramco CEO sees oil supply shortage as investments, discoveries drop, July 10, 2017

Image Source: Middle East Eye

 

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