CERAWEEK: Saudi Aramco CEO says oil phaseout is a 'fantasy' in transition rebuttal

Saudi Aramco CEO Amin Hassan Nasser said March 18 he saw higher oil demand above 104 million b/d in 2025 and described the phaseout of fossil fuels as a "fantasy", in a robust defense of fossil fuels industries in remarks at CERAWeek by S&P Global in Houston.

"We should abandon fantasy of phasing out oil and gas," Nasser said in response to questions at CERAWeek.

Nasser -- who heads the largest oil company in the Middle East -- said the energy transition narrative would increasingly be written by the developing nations of the global south, which are expected to drive demand growing beyond 104 million b/d forecast for 2024 into the following year.

In a call to discuss the company's 2023 results Nasser said on March 10 that demand for 2024 is expected to grow 1.5 million b/d in average after reaching an estimated level of 102.4 million b/d in 2023.

Saudi Aramco's view on oil demand growth this year is more muted than the OPEC's, which in its monthly oil market report for March estimated an increase of 2.2 million b/d in 2024 and global oil consumption to hit 106.3 million b/d in 2025. In contrast, the International Energy Agency expects an increase of 1.3 million b/d in 2024, according to its latest monthly oil market report.

Upstream outlook

Nasser's justification of the fossil fuel industry comes as OPEC ratchets up its defense of its oil producing members, which depend on the export of crude to obtain foreign currency export earnings but have come under criticism for adding to climate change.

"The energy transition narrative will increasingly be written by the global south," Nasser said. "Nations in the south cannot afford expensive energy solutions, he added.

He also dismissed the idea of peak oil by 2030 and said that it was a while to come.

About the attacks on shipping and commodities transiting the Red Sea, Nasser said they had minimal impact on Saudi oil exports.

Despite the kingdom's decision to abandon a plan to increase production capacity to 13 million b/d by 2027 from 12 million b/d at present, Nasser said Saudi Aramco still maintained 3 million b/d of spare capacity.

Saudi Arabia's production over the last few months has been below 9 million b/d due to its compliance with the ongoing OPEC+ cuts.

Energy transition goals

On March 10 Nasser told reporters that Saudi Aramco remained ready to meet market demand requirements if needed in spite of the cancellation of the long-standing plan to add 1 million b/d of production capacity.

In spite of Nasser's rebuke of the phaseout of fossil fuels at CERAWeek, Saudi Arabia is committed to transitioning away from the polluting fuels and reaching net-zero by 2060.

Saudi Aramco, which has begun assessing the carbon intensity of various crude grades plans to reach the net-zero goal earlier, by 2050.

The state-run company also plans to lower scope 1 and scope 2 of emissions from its upstream activities by 15% by 2035.

Gas focused strategy

Saudi Aramco's plans to lower oil burn in the country involves increasing its output of gas. The company recently moved its gas production target to 60% from 2021 levels, from 50% announced earlier. That move would free up around 1 million b/d of liquids for export as well as an additional 1 million b/d of liquids associated with gas production.

"You're talking about 2 million b/d [of liquids] and you are talking about carrying a spare capacity of 3 million b/d," Nasser said in a presentation to analysts on March 11. "So, you have a lot of space in the future depending on the shareholder, which is the government, ... if they want to revive [the crude capacity expansion]. Depending on the government, whenever they decide, usually to carry out these projects [it takes] between four and five years."