During panel session "Strategic Update: The Future of Energy" at the Davos forum, head of Saudi Aramco said that the world has certain illusions about falling demand for hydrocarbons, as well as their rapid replacement with alternative energy sources. According to him, share of renewable energy in the long term will continue to grow, yet will not become dominant compared to hydrocarbons.
"I agree with the point that now there is a certain transformation in the energy sector, which causes quite a lot of pressure on the oil and gas industry. There are many factors such as legal restrictions of governments or technological improvements.
However, aggregate share of the relatively new segments - solar and wind energy - is only 4%. With this in mind, it is difficult to say that these energy sources will soon become dominant and will put pressure on remaining segments of the energy sector in the long term
On the question of electric vehicles, which obviously also have an impact on the oil sector and other traditional hydrocarbons, it is necessary to imagine real proportion of the market. Today, the world has approximately 1.2 million electric cars, and 1.2 billion units of convenient cars.
According to the International Energy Agency, the world will have approximately 150 million electric vehicles by 2040. At the same time, however, number of conventional passenger cars will increase from 1.2 billion to 2 billion. That is, share of electric cars will number around 8% in the segment of passenger cars by 2040.
We should not forget that oil and its derivatives are used not only in the segment of passenger cars, but also in segments such as heavy trucks, aviation, shipping, petrochemicals.
So, on the one hand, we can see that renewable energy will increase its share in the energy balance, but its role is not dominant yet.
With this in mind, Saudi Aramco is increasing production capacity in the oil, we also increase our portfolio of gas assets.
Our general forecast is that demand for oil will continue to be pretty decent. In 2016, the global demand for oil increased by 1.4 million barrels per day. In 2017, we expect global growth in oil demand in the area of 1.3 million barrels per day.
If we look at the IEA’s forecasts, we see that the base forecast is that world oil demand in 2040 will amount to 103 million barrels per day. This means that global demand in the next 25 years will grow compared with the current values. We need to be ready for it and have appropriate capacity to meet oil demand.
In my view, hydrocarbons will remain with us for decades. The oil sector should be expanded; it will need new capital to increase production capacity. If you look at amount of investment that will be required over the next quarter-century, we are talking about investments of $ 25 trillion according to forecasts on demand.
Therefore, the current uncertainty surrounding the renewable energy sources should not interfere with raising necessary capital in new production capacity in the oil sector. Otherwise, I think we will see a sharp jump in oil prices, and this will have a negative impact on the global economy."
source: saudiaramco.com
"I agree with the point that now there is a certain transformation in the energy sector, which causes quite a lot of pressure on the oil and gas industry. There are many factors such as legal restrictions of governments or technological improvements.
However, aggregate share of the relatively new segments - solar and wind energy - is only 4%. With this in mind, it is difficult to say that these energy sources will soon become dominant and will put pressure on remaining segments of the energy sector in the long term
On the question of electric vehicles, which obviously also have an impact on the oil sector and other traditional hydrocarbons, it is necessary to imagine real proportion of the market. Today, the world has approximately 1.2 million electric cars, and 1.2 billion units of convenient cars.
According to the International Energy Agency, the world will have approximately 150 million electric vehicles by 2040. At the same time, however, number of conventional passenger cars will increase from 1.2 billion to 2 billion. That is, share of electric cars will number around 8% in the segment of passenger cars by 2040.
We should not forget that oil and its derivatives are used not only in the segment of passenger cars, but also in segments such as heavy trucks, aviation, shipping, petrochemicals.
So, on the one hand, we can see that renewable energy will increase its share in the energy balance, but its role is not dominant yet.
With this in mind, Saudi Aramco is increasing production capacity in the oil, we also increase our portfolio of gas assets.
Our general forecast is that demand for oil will continue to be pretty decent. In 2016, the global demand for oil increased by 1.4 million barrels per day. In 2017, we expect global growth in oil demand in the area of 1.3 million barrels per day.
If we look at the IEA’s forecasts, we see that the base forecast is that world oil demand in 2040 will amount to 103 million barrels per day. This means that global demand in the next 25 years will grow compared with the current values. We need to be ready for it and have appropriate capacity to meet oil demand.
In my view, hydrocarbons will remain with us for decades. The oil sector should be expanded; it will need new capital to increase production capacity. If you look at amount of investment that will be required over the next quarter-century, we are talking about investments of $ 25 trillion according to forecasts on demand.
Therefore, the current uncertainty surrounding the renewable energy sources should not interfere with raising necessary capital in new production capacity in the oil sector. Otherwise, I think we will see a sharp jump in oil prices, and this will have a negative impact on the global economy."
source: saudiaramco.com
