‘We should abandon the fantasy of phasing out oil and gas’: Saudi oil CEO – Oil and gas executives push back against expectations for a global shift to low-carbon energy

March 21, 2024

Article Originally published by CBC News. Written by Kyle Bakx.

The head of the world’s largest energy company on Monday urged the world to accept the “hard realities” that oil and natural gas will be around for a long time to come and consumption of both sources of energy is likely to grow for at least the next decade or two.

In a speech at a Houston energy conference, Saudi Aramco CEO Amin Nasser described the ambitious timetables of environmental groups as failing because the world continues to consume record amounts of fossil fuels every year.

“We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately reflecting realistic demand assumptions,” he said.

Oil consumption will reach a new record of 104 million barrels per day this year, Nasser said, and could keep growing through 2045.

“All this strengthens the view that peak oil and gas is unlikely for some time to come, let alone 2030,” he said. “No one is betting the farm on that.”

Nasser’s comments come just a few months after countries around the world, including Saudi Arabia, reached a new climate agreement, which specifically calls for the “transitioning away from fossil fuels in energy systems” to achieve net zero emissions by 2050.”

A digital globe spins in the hallway at a conference centre.
Climate change and carbon emissions are two of the top issues discussed at the summit, which is one of the largest energy conferences around the world. (Kyle Bakx/CBC)

After the agreement was passed in December during the UN climate conference, the president of the two-week summit in Dubai, Sultan al-Jaber, said the new deal would “set the world in the right direction.”

The agreement was considered groundbreaking as it marked the first time that countries agreed to explicitly address fossil fuels and the need to move away from oil, natural gas and coal in order to limit global warming.

The most recent World Energy Outlook report from the International Energy Agency (IEA) predicts that way the world is powered will change dramatically by the end of the decade, thanks to surging demand for electric vehicles and clean energy technologies.

The report also included a stark warning: much stronger policies are needed to limit fossil fuel emissions to keep warming to 1.5 C by the end of the century.

In Houston on Monday at the CERAWeek by S&P Global energy conference, some other CEOs of oil companies also cautioned how it will take time for the world to shift to low-carbon sources of energy, such as hydrogen.

“We’re not on the path to make net-zero by 2050 currently and one of the challenges here is that while society wants to see emissions reduced, nobody wants to pay for it,” said Darren Woods, chief executive of ExxonMobil.

Around the globe, investment in renewable energy is outpacing the amount spent on growing the oil and natural gas industry. That point was highlighted by U.S. Secretary of Energy Jennifer Granholm in her speech, as she described a clean energy revolution in the country. She urged members of the oilpatch to take action on climate change.

“Consumers are calling for change, investors are calling for change. We in this room have the power to manage this transition responsibly and with urgency,” she said.

The difference in the views of Granholm and Nasser was noticeable and were “two different realities,” said Amanda Eversole, executive vice president with the American Petroleum Institute, in an interview with CBC News on the sidelines of CERAWeek.

“We want to get back to the facts of what the world needs in terms of energy demand and make sure that we do it in a way that produces affordable, reliable and cleaner energy,” she said.

A woman is interviewed in a hallway with people walking in the background.
The world continues to want more energy and it’s going to be incumbent on the oilpatch to meet that demand, said Amanda Eversole, executive vice president with the American Petroleum Institute. (Kyle Bakx/CBC)

Shell’s CEO Wael Sawan struck a more of a conciliatory tone by criticizing the increasing polarization of energy.

“Is it oil and gas or is it solar and wind? It’s all and we need them in abundance,” said Sawan.

The International Energy Agency continues to forecast global oil demand to grow this year, although last week updated its outlook to project a slight supply deficit. The report boosted oil prices above $80 US per barrel.

“The exciting truth is that we already have cheaper alternatives for oil and gas in transportation, home heating and cooling and electricity generation, and are inventing new ways to replace it for other uses,” said Keith Stewart, senior energy strategist at Greenpeace Canada, in an email.

“The only questions are if we will make the transition off fossil fuels fast enough to avoid the worst impacts of climate change and how we can support workers and communities in oil-producing regions through the transition.”