Energy transition plan reset needed with renewed focus on Asia – Aramco President

SIGNAPORE (ICIS)–Saudi Aramco chief Amin Nasser on Monday called for a new energy transition plan that considers the needs of all countries, specifically those in Asia and the broader Global South, amid growing oil demand.

• Single one size fits all plan for every country is unrealistic – Nasser
• Transition will be a costly affair, with an estimated $100-200 trillion required globally by 2050
• World not yet at peak oil demand

“This may be Asia’s century. But Asia’s voice and priorities, like those of the broader Global South, are hard to see in current transition planning, and the whole world is feeling the consequences,” Nasser, the President and CEO of Aramco, told delegates at the Singapore International Energy Week (SIEW) conference in Singapore.

“Transition progress is far slower, far less equitable, and far more complicated than many expected… Our main focus should be on the levers available now.”

Each country needs to choose an energy mix that helps them meet their climate emissions “at a speed and a manner that is right for them”, Nasser said.

Asia, accounting for over half of the world’s energy supplies, still relies on oil and gas for 84% of its energy needs. Alternatives are mostly meeting consumption growth, not displacing demand for oil and gas, he said.

Furthermore, large segments such as heavy transportation and petrochemicals have few economically viable alternatives to oil and gas.

Instead of forgoing conventional energy, Nasser encouraged countries to invest in these “proven and reliable” energy sources that developing nations need and can afford.

At the same time, the world needs to invest in technologies that will reduce the cost of renewables and that can compete in price and performance.

“We need to provide… energy that is secure, affordable, and sustainable. You cannot talk about sustainability without making sure you ensure security and affordability,” he said.

On energy transition costs, Nasser said: “Transition will be expensive for everyone, with estimates of between $100 and $200 trillion required globally by 2050.”

“For developing countries, almost $6 trillion may be required each year. Moreover, in a transition that requires staggering amounts of front-end capital investment, the cost of capital is more than twice as high in developing countries where the need is greater.”

GLOBAL SOUTH OIL DEMAND TO CONTINUE GROWTH TRAJECTORY
Even though oil growth has plateaued in some mature economies, such as the EU, the US, and Japan, they still consume large amounts of oil, Nasser said.

“While US oil consumption is roughly 22 barrels per person per year, and the EU is around 9 barrels, it is 2.4 barrels in Vietnam, 1.4 barrels in India, and only 1 barrel in Africa,” Nasser said.

This means that oil demand will continue to grow in the Global South, he said.

Currently, the world is consuming “record amounts of oil”, at 100 million barrels, or 80% of energy, compared to 84% thirty years ago.

More than 100 million barrels per day will realistically still be required by 2050, a stark contrast to some predictions that oil will fall to 25 million barrels per day by then, Nasser said.

“Being short 75 million barrels every day will be devastating for energy security and affordability,” Nasser added.

Focus article by Jonathan Yee