Saudi Aramco chief executive Amin Nasser said the world needs the right execution strategy when it comes to the energy transition, with fossil fuels expected to play a key role for a much longer time.
Nasser, while speaking at the 23rd World Petroleum Congress in Houston termed the existing energy transition strategy for the industry as “deeply flawed”, and said it's worrying that people believe the right strategy is under way.
“Energy security, economic development and affordability imperatives are clearly not receiving enough attention,” Nasser noted.
He said that unless the glaring gaps are filled in the ongoing energy transition strategy, “the chaos in the industry will only intensify".
Nasser said that new and existing energy sources, including oil and gas, will both need to operate in parallel for a much longer time.
The Saudi Arabian state-controlled company is spending billions of dollars to ramp up its oil production capacity to 13 million barrels per day, but has also laid out an ambitious plan to achieve Scope 1 and 2 net-zero emissions by 2050.
Nasser said Aramco remains committed to its climate goals and a net-zero economy but believes that stopping oil and gas investments could prove to be more damaging.
He said more than 99% of the world's vehicles are still dependent on conventional fuels and the “combined share of solar and wind in the world's primary energy mix is still less than 2%".
“The urgent new quest for our industry is to chart a course that will continue to realistically meet the world's rising energy needs in a reliable, affordable and sustainable manner."
Nasser raised concerns over the declining capital expenditure in the oil and gas sector, saying crude supplies have already started to lag.
“Across the industry, upstream capex fell by more than 50% between 2014 and last year, from $700 billion to $300 billion,” he said.
He said the declining capex is also “hurting spare oil production capacity, which is declining sharply" despite healthy demand growth.
Nasser added that a majority of key industry stakeholders agree with these realities as far as the energy transition is concerned but need to admit it in public.
“Publicly admitting that oil and gas will play an essential and significant role during the transition and beyond will be hard for some,” he said.
However, he added that admitting this reality will be far easier than dealing with energy insecurity, rampant inflation and social unrest globally.