Saudi Aramco CEO says 80% of oil demand to come from Global South by 2050

Saudi Aramco's CEO Amin Nasser said April 29 that nations in the Global South will continue to fuel oil demand growth and urged investments in renewables and hydrocarbons to help nations meet a global net-zero deadline by the middle of the century.

"They [Global North] are putting a lot of funds to create the transition," Nasser said in a special meeting of the World Economic Forum in the Saudi capital Riyadh. "It doesn't work where the demand is today. Fifty to 60% of the demand is in the Global South. By 2050, 80% of the hydrocarbon demand is going to be in the Global South. So, we need to take that into consideration if we are worried about emissions. We need to focus on a mission rather than picking winners or losers."

Global North refers to rich, industrialized countries largely found in the northern part of the world. Global South refers to countries located in the south of the globe where populations face challenges in accessing an adequate standard of living and wages.

Saudi Arabia, the world's largest oil-exporting country is located in the Global South. However, the country is the largest economy in the Middle East and is pursuing a goal to transition away from its main resource of oil by 2060.

State-owned Saudi Aramco is committed to reaching the net-zero goal by 2050, a decade earlier than Saudi Arabia. Nasser advocated for higher investments in fossil fuels in December 2023, calling them more viable than renewables, urged greater investments in all forms of energy.

Equitable transition

"Four per cent of the total world energy comes from solar and wind if you look between 2000 and 2023," Nasser said. "However, between 2002 and 2023, fossil fuels grew by 100 million barrels of oil equivalent. So, it doesn't mean that by investing in solar, wind or renewables, the other mix will not increase. We need all sources of energy."

He cautioned against a costly transition that could disincentivize Global South economies and force some to adopt cheaper hydrocarbons such as coal.

"Coal is an average of $50/boe, LNG [liquefied natural gas] is $70/boe and oil is fluctuating between $80/b and 90/b. Countries have different priorities and will go for the most affordable," Nasser said.

He urged energy transition policy makers to consider a "multi-speed" approach that takes into account the "economic maturity" of each country.

Upstream rationalization

Saudi Aramco in January said it would scale back on a planned multi-billion-dollar investment in expanding its sustainable production capacity to 13 million b/d by 2027, from 12 million b/d at present.

Saudi Arabia's energy minister Prince Abdulaziz bin Salman later explained the decision as one taking into account the country's diversifying power mix, which aims to incorporate up to 100-130 GW of renewables by an undefined timeline. The kingdom's currently defined target for clean power is 58.7GW by 2030.

Nasser has repeatedly called for cost-competitiveness in renewables and clean tech investments. Hydrogen, which is being prioritized as an alternative fuel by Gulf oil exporters "was still too costly" to scale up and displace conventional hydrocarbons, he said April 22 at the World Energy Congress in Rotterdam.

Saudi Aramco, which has said it is aggressively ramping up its hydrogen sector, has sought offtake agreements of $200/b of oil equivalent for blue hydrogen and $400/boe for green hydrogen, but has found few takers, he said.

The company aims to produce up to 11 million mt/year of blue ammonia that can be used for power generation by 2030, tapping into its vast natural gas resources supported by recent unconventional finds.