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The IPO of Saudi Aramco is “proceeding very well.“ CEO Amin Nasser told the crowd at the CERAWeek conference here in Houston today. He didn’t elaborate much. saying that the ultimate decision to take the plunge would lay with the Saudi government — namely Crown Prince Mohammed bin Salman. A domestic listing on Riyadh’s Tadawul exchange would be the easiest avenue. though sources close to the Saudis say there’s a real desire for shares to trade in New York. London or Hong Kong.
Nasser insisted that the world is far from seeing Peak Oil demand. “Oil will maintain its key role in the global energy mix for the forseeable future.“ he said. given that 99% of all vehicles on the road remain powered by internal combustion engines.
To meet that need. said Nasser. the industry must invest $20 trillion in oilfield capex over the next 25 years. While in just the next five years. Nasser said. the industry will need to build out 20 million barrels per day of oil production capacity. both to balance out natural declines in mature fields (on the order of 5% per year. worldwide) plus provide for demand growth. (Aramco. for context. maintains sustainable production capacity of 12 million bpd.) That these future investments will happen is not guaranteed. he said. They will “only come if investors are convinced that oil will be allowed to compete on a level playing field. that oil is worth so much more. and that oil is here for the foreseeable future.“ he said.
That’s a position increasingly out of step with the publicly traded oil giants like Exxon. Shell. BP and Total. who not only admit that the world must transition to a future of low-carbon energy. but are actively investing in alternative solutions. BP in its new 2018 Energy Outlook last month included a baseline scenario that sees global oil demand peaking as soon as the mid-2030s.
Nasser’s not shy in his assertion that any obituaries on the age of oil are premature. “We must challenge mistaken assumptions about the speed with which alternatives will penetrade markets.“ he said.
Indeed. Nasser and Aramco have no choice but to challenge that assumption — they’ve got an IPO to sell.
