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The oil industry faces a “crisis of perception“ among its stakeholders that puts at risk its ability to supply energy to billions of customers. Saudi Aramco CEO Nasser Amin said in his speech at the International Petroleum Week (IPWEEK) in London.
“Despite this historic success. there is a worrying and growing belief among policy makers and regulators. investment houses. NGOs. and many others that we are an industry with little or no future.“ Nasser said.
“These views are not based on logic and facts. and are formed mostly in response to pressure and hype.“ he said in response to claims saying that petrol-burning cars will soon be replaced by electric vehicles.
Passenger vehicles represent 20 percent of the world’s oil demand. he noted. adding that no alternative sources of fuel can meet the demand of aircraft. ships. trucks. as well as the petrochemical and lubricants industries. where demand for oil is expected to rise substantially.
“They do not recognize a world where alternatives such as solar and wind. although growing rapidly (including in Saudi Arabia). still account for just 2 percent of primary energy demand today.“ Nasser continued.
He also pointed to the “intermittent nature“ of renewable sources. and the disruption to infrastructure that would be needed. especially in under-developed countries. for a switch to renewable energy sources.
Warning about the consequences if crude supply were to fall substantially. he said: “Only recently. we saw what a supply deficit of a couple of million barrels per day can do to the oil market. Imagine what 20 million barrels fewer per day would do — which would be the shortfall in five years if investments stopped today.“
“And the impact would be even more profound for economies. societies. and people if demand continues to grow over the next five years. as we expect. Ironically. higher oil prices would cause much less pain to us than most.“ he added.
Nasser outlined the following five areas to “deal with this perception crisis“:
– Showing that the industry understands the concerns and is willing to act on them.
– Demonstrating that Big Oil is tackling environmental. social and governance issues
Emphasizing the technological advances the industry drives. especially in energy efficiency.
– Pushing back on the criticisms that oil is a bad financial investment and that demand for it will soon peak.
– Highlighting the “inspirational“ aspects of the industry. like its ability to improve living standards.
“We need to show millennials that we are as innovative as Apple. Google. or Samsung. and are determined to use cutting-edge technology to make the world a better place.“ Nasser said.
“All energy sources will be required for decades to come. and a long-term investment in our industry is both wise and profitable to deliver on that demand growth.“ he concluded.
