The Saudi energy minister is pressing for a halt to Aramco’s oil potential on a green shift
Saudi Minister of Energy Abdulaziz bin Salman on October 5, 2022.
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Saudi state-controlled oil giant Aramco has suspended its capacity expansion plans due to the green transition, Energy Minister Abdulaziz bin Salman said on Monday, stressing that future energy security depends on renewables. – innovative.
“I think we put this off [Aramco capacity] invest simply because … we are changing. And transition means that even our oil company, which used to be an oil company, became a hydrocarbon company. Now it’s going to be an energy company,” the Saudi prince said at a question-and-answer panel at the International Petroleum Technology Conference in Dhahran, noting that Aramco has investments in oil, gas , petrochemicals and renewables.
On January 30, the Saudi energy ministry shocked the markets with a directive calling on Saudi majority-owned Aramco, which went public in 2019, to halt plans to increase maximum crude production capacity from 12 million barrels per day to 13 million barrels per day. a day before 2027. The ministry did not disclose the reason behind its decision at the time, raising questions about possible Saudi concerns about the future of oil demand in the midst of an ongoing energy movement.
The Saudi energy minister testified on Monday that the decision was not made hastily and was the result of an ongoing review of market conditions.
“We’re in [a] a process of review and review and continuous review, simply because you need to see the facts [of the market],” he said.
Oil prices have gone through waves of volatility due to the Covid-19 pandemic, measured by a lower-than-expected recovery in Chinese demand and inflationary pressures. The global movement to decarbonise the climate crisis and stop energy companies from divesting long-term fossil fuel projects for greener investment pastures – and could redefine the landscape for energy security, Abdulaziz bin Salman said on Monday.
“Energy security in the 70s, 80s and 90s was more dependent on oil. Now, you get what happened last year… It was gas. The problem with energy security at the time future, it will not be oil. It will be renewables. materials, and the minerals,” he said, noting that there is still a “huge cushion” of additional capacity available if there is a critical shortage. Previously, such supply shocks have resulted in sanctions or attacks against oil infrastructure around the world.
“Why should we be the last country that has energy capacity, or emergency capacity, when it is not considered? And when it is not recognized?” the Saudi energy minister said. “Energy security is not just Saudi Arabia’s responsibility. It is the responsibility of all energy producers and energy ministries,”
In particular, additional capacity has long been a diplomatic tool in the Saudi-led Organization of the Petroleum Exporting Countries, shaping the influence of the month-long price war between Riyadh and Moscow in 2020.
Saudi Arabia and its OPEC allies have long supported an energy transition strategy that uses fossil fuel resources to make renewable supplies available to fully cover global requirements, which ‘ reducing concerns about markets hitting old demand. The position is completely different from the position of the International Energy Agency, which in an important report in 2021 advocated against further investment in fossil fuel supply projects, if humanity is to put the -face the climate crisis.
But Middle Eastern countries have made more of an effort to reconcile their image as strong fossil fuel producers with their energy transition ambitions, with OPEC’s top producer the United Arab Emirates hosting the Conference of the Parties. on the UN climate (COP).
The world’s largest crude exporter, Saudi Arabia aims to decarbonise by 2060, with Saudi Aramco aiming to reach operational net-zero emissions by 2050. Guided by the Prince’s Vision 2030 plan Crown Mohammed bin Salman, the kingdom has also been involved in diversifying its economy away. from overreliance on fossil fuels.