Saudi Arabia’s state oil company has said the industry faces a “crisis of perception” because society believes it has no future, which it says could threaten world energy security.
Amin Nasser, the chief executive of Saudi Aramco, said financiers at the World Economic Forum in Davos last month had told him the sector had only a few years left because of trends such as the rise of electric cars.
Policymakers, regulators, investors and NGOs increasingly believed that oil and gas firms have little or no future, he said.
“My encounters in Davos showed me that fewer and fewer of our stakeholders accept logic and facts, least of all from us. We are therefore facing what I would call a crisis of perception,” he told an industry audience in London.
He said: “Because it [the crisis] threatens our industry’s very relevance, it puts our ability to supply ample, reliable and affordable energy to billions around the world at risk, which in turn risks their energy security.”
Nasser claimed the idea that oil demand would soon peak, which most authorities think will happen in the next two decades, was an exaggerated theory.
Saudi Arabia is one of the world’s biggest oil producers, with only Russia and the US on a par, and it plans to increase its output in the coming decade.
Nasser’s speech did not explicitly mention climate change but he said one of the remedies to the sector’s image problem was to understand society wanted clean energy and a reduction in carbon dioxide emissions. Asked what the Paris climate agreement meant for Saudi Aramco, he boasted that the company would become a “global leader” in another fossil fuel – gas.
He also said Saudi Aramco would invest more in petrochemicals but that it would not yet be entering the renewables market because the Gulf kingdom was already investing in solar power.
Nasser said that if the firm stopped investing now, the world would face a shortfall in oil supply in five years’ time that would lead to higher oil prices – reinforcing a perception the industry was profiteering. Saudi Aramco is reportedly the world’s most profitable company.
Bob Dudley, the chief executive of BP, said he agreed with the Saudi oil boss. “The world is driven by myths and not facts,” he said.
Dudley said: “I think we have a particular challenge with [the perception of] energy. But I think business in general has a huge communications issue. I think we are seeing the effects of the financial crisis rolling through now, particularly in the western world, and everybody is looking for people to blame. Unfortunately I think the political system is starting to blame companies and business more.”
On Tuesday, oil prices crept up to $65 (£49) a barrel. On Monday, they had fallen when Donald Trump tweeted that they were getting too high and told oil cartel Opec – of which Saudi Arabia is the de facto leader – the world could not take a price hike.
