COP28: Saudi Aramco CEO says fossil fuel investment more viable than renewables to meet demand

Saudi Aramco's CEO Amin Nasser on Dec. 4 called for more investment in oil compared to renewables to meet energy demand growth.

"If you look at this quarter, there is 103 million b/d of demand, compared to 2019 where we were running around 100 million b/d," Nasser told the Saudi Green Initiative, a side event at COP28 UN climate summit in Dubai, where fossil fuel companies have called for a seat at the table to discuss their contributions to the future energy mix.

"We anticipate there is going to be further growth in demand going forward and as such you need that investment to meet the call on our production and at the same time manage the decline in existing fields," he added.

Nasser's call for greater investment in fossil fuels is at odds with climate activists and observers at the United Nations Framework Convention on Climate Change event, who have questioned the sensibility of fossil fuel producers such as the UAE hosting climate talks.

Saudi Aramco has exclusive rights to produce crude oil within Saudi Arabia, pumping some 9-11% of global supply, depending on the kingdom's production quota under the OPEC+ accord. At the moment, Saudi Arabia has agreed to hold output at 9 million b/d, as the OPEC+ alliance seeks to bolster flagging prices, leaving some 3 million b/d of capacity offline.

According to S&P Global Commodity Insights, global oil demand is set to reach pre-pandemic levels for the first time in 2023 and hit an all-time high of 105 million b/d in 2025.

S&P Global forecasts global oil demand to be "solid" in the fourth quarter of this year with a 2.4 million b/d increase on the year. Mild-to-average global recession is set to slow growth to 1.2 million b/d for 2024, according to estimates.

Expensive hydrogen

Saudi Aramco's chief called for more investment in fossil fuels while dismissing the short-term viability of renewables due to what he suggested were higher costs and low demand for clean energy.

"I think we need more investment," Nasser said citing a 40% decline in investment in fossil fuels from 2014 levels.

"If you look at existing fields today and the level of maturity that we're seeing in conventional and unconventional resources, you're looking at a 7% decline," he added.

Saudi Aramco is currently boosting domestic oil production capacity to 13 million b/d by 2027 from around 12 million b/d presently. The company is also committed to reaching net-zero emissions by 2050, with projects underway to capture and store carbon dioxide from upstream processes, as well as investments in renewables and hydrogen.

It has said its capital expenditures for 2023 will be between $48 billion to $52 billion, with Q3 spending at $11 billion, an increase over the $9 billion spent in the same quarter of 2022.

"We're investing in renewables, hydrogen, e-fuels and all of that, but still you need a lot more investment and it needs to pass a certain threshold to make it commercial," Nasser said.

"Hydrogen now is waiting for demand. Demand is still not there for obvious reasons: it is expensive. At the same time, we need to continue to invest in oil and gas because there is more demand," he added.