Oil and gas will remain the backbone of the global energy system for decades to come, state-controlled Saudi Aramco's chief executive Amin Nasser told CERAWeek by S&P Global conference.
Just a year ago, Nasser's UAE counterpart, Adnoc chief executive Sultan al-Jaber exhorted the oil industry leaders at CERAWeek to step up efforts to decarbonize their operations and the global energy system. But Nasser's message appears to have been received more warmly in Houston.
"We should abandon the fantasy of phasing out oil and gas and instead invest in them, adequately reflecting realistic demand assumptions," Nasser said, drawing a round of applause.
Conversations on energy transition are led by the advanced economies, ignoring the needs of emerging economies that have accounted for most of the growth in oil and gas demand, Nasser said.
The so-called "global south" accounts for the majority of the world's population and energy demand growth, but draws just a fraction of global investments in renewable capacity, Nasser said. "These nations cannot afford expensive energy solutions."
Despite the development of renewable alternatives, focusing on reducing emissions from hydrocarbons produces better results in cutting back greenhouse gas, Nasser said. Aramco itself plans an ambitious gas production growth, in part to reduce the use of oil in domestic power generation.
"The future of energy transition in Indonesia is gas," Indonesia's energy ministry director general Tutuka Ariadji told a different CERAWeek panel today.
Aramco is still keen to pursue hydrogen production agreements with partners in South Korea and Japan, but high costs are an issue, Nasser said. Aramco estimates the cost of producing hydrogen produced from natural gas with carbon capture at oil-equivalent $200/bl, while renewable hydrogen production costs are oil-equivalent $400/bl, Nasser said. "Our partners, our customers, especially in Japan and Korea, are waiting for government incentives" before moving forward on those projects, he said.
