Saudi Arabia’s state oil giant Aramco doesn’t fear peak oil demand as it doubles down on boosting oil production in the long term to beat its competitors, many of which are pledging significant investments in low-carbon energy.
Aramco is set on increasing its production capacity, and by extension, the production capacity of the world’s top oil exporter, Saudi Arabia, to squeeze out as much oil as possible, analysts and sources in the industry told Reuters this week.
In a statement to Reuters, Aramco commented:
“We expect oil demand growth to continue in the long term, driven by rising populations and economic growth. Fuels and petrochemicals will support demand growth ... speculation about an imminent peak in oil demand is simply not consistent with the realities of oil consumption.”
Analysts and oil majors have recently said that the coronavirus pandemic and the possible lasting shift of consumer behavior may have already brought peak oil demand.
Globally, we may have passed peak oil demand last year, as fuel consumption may never recover from the pandemic-inflicted decline, BP said in its annual outlook last month.
In all of BP’s scenarios, global oil demand is set to decline within 2050. The Rapid and Net Zero scenarios assume that oil demand has already peaked, while in the Business-As-Usual (BAU) scenario, demand is expected to peak in the early 2020s, due to growing electrification and efficiency in road transportation. The rise of EVs will see oil demand for transport peaking in the mid- to late-2020s, according to BP. Related: The Geopolitical Power Of The Shale Revolution Is Fading
Aramco, however, has been dismissing for years the notion of peak oil demand, especially forecasts that it could occur before 2040.
At the beginning of 2020, before COVID-19 upended all forecasts, Aramco’s chairman Yasir Al-Rumayyan said that energy transitions “take decades, even centuries” to complete, and the industry should continue to think in decades.
Last year, Aramco’s CEO Amin Nasser rebuked all those who predict the demise of the oil industry in the near future, saying that views that the world will soon run on anything but oil “are not based on logic and facts, and are formed mostly in response to pressure and hype.”
ADVERTISEMENT
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Natural Gas Offers Lifeline For Distressed Gulf Oil Giants
- There’s More Upside For Natural Gas Prices
- Oil Rallies On Stimulus Hopes
It said “We expect oil demand growth to continue in the long term, driven by rising populations and economic growth. Fuels and petrochemicals will support demand growth. speculation about an imminent peak in oil demand is simply not consistent with the realities of oil consumption.”
Moreover, Aramco’s chairman Yasir Al-Rumayyan rejected the notion of imminent global energy transition from oil and gas to renewables saying that energy transitions take decades, even centuries to complete, and the industry should continue to think in decades.
I concur by saying that oil and gas will continue to drive the global economy throughout the 21st century and far beyond.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London