Aramco vs Energy Agency on the future of Oil and Energy
With the CERAWeek 2025 conference in Houston drawing to a close, top corporate executives, ministers and senior officials weighed in on the trajectory of the global oil and gas sector, with experts debating whether tariffs, trade and competition will replace security, affordability and sustainability in shaping energy markets and policies.
However, one of the most important moments of the conference was the confrontation between the CEO of Saudi Aramco , Amin Nasser , and the Executive Director of the IEA, the International Energy Agency, Fatih Birol, and their extremely divergent views on the future of the global oil industry.
Once again, Aramco's CEO reiterated the existence of "inherent flaws" in the energy transition away from conventional fuels, saying: " So I pay little attention to forecasts that say next year will be peak this or that ," in a veiled dig at the IEA which has predicted peak oil demand by the end of the current decade.
In its defense, the IEA says that a peak in oil demand does not necessarily mean that a rapid collapse in fossil fuel consumption is imminent, adding that it will likely be followed by “ an undulating plateau lasting for many years ”. Indeed, Fatih Birol reiterated this position in his remarks at the Houston conference, where he said that investments in existing oil and gas fields are still needed to counteract sharp natural declines. While some analysts have interpreted this statement as a turning point, designed to pander to Trump and his “drill baby drill” program, in reality the IEA has never supported the need to end investments in upstream oil and gas, or rather it has done so with moderation…
Fatih Biron
“ Even if demand for fossil fuels declines, energy security challenges will remain, as the process of adapting to changing demand patterns will not necessarily be easy or smooth. For example, the demand peaks we see based on today's policies do not eliminate the need to invest in oil and gas supply, given that the natural decline of existing fields is often very strong ,” the IEA said in its World Energy Outlook 2023 .
Amin. Nasser, ARAMCO
Republican lawmakers have threatened to review funding for the IEA, accusing it of becoming an “energy transition cheerleader.” Perhaps this also influenced Birol's decision and his change of position.
Cut emissions, not oil
As the global energy transition gathers pace, hundreds of companies have set out plans to reduce their greenhouse gas emissions, with the most ambitious having pledged to achieve net-zero emissions . In this context, big oil companies face a dilemma: they are under pressure to join the fight against climate change at a time when demand for the energy commodities they produce remains high. It's no surprise that many of them are coming up with innovative ways to get clean without giving up their traditional businesses.
Saudi Aramco is no different. The world's largest oil and gas company has unveiled a plan to reach net zero by 2050 without sacrificing oil and gas production.
During a rare two-day visit by Fortune last May, the world's largest fossil fuel company lifted the veil on dozens of research projects underway at its headquarters in Dhahran, eastern Saudi Arabia, that the company believes could help it tackle climate change, including by pumping out a whopping 9 million barrels of oil per day. Aramco claims that its technological innovations have the potential to reduce carbon emissions from every barrel of oil produced by 15% by 2035, equivalent to 51.1 million tonnes of carbon per year.
“ We don't see any contradiction. Combating emissions from these conventional energy sources is a very viable option ,” says Ashraf Al-Ghazzawi, executive vice president for strategy and business development.
“ We need all sources of energy to meet the growth in demand, which is truly enormous in developing countries. The main pillar of our strategy and technology is efficiency and optimization of existing production ,” Ahmad Al-Khowaiter, Aramaco executive vice president for technology and innovation, told Fortune. According to Khowaiter, the company has tripled its research and development staff since 2010 and has registered 1,033 patents with the U.S. Patent Office. Aramco spends about $800 million a year on research and development, 60% of which is focused on “sustainability.”
Hawiyah, gas production plant
Carbon capture is one of the technologies adopted by Aramco to reduce emissions. At its Hawiyah gas plant, the company captures carbon emitted during oil and gas production, transports it 50 miles away and injects it into an oil well to increase crude oil recovery and to store carbon. Khowaiter revealed that the company aims to reduce the cost of carbon capture by 50%, making it commercially viable.
In December, Saudi Aramco signed a shareholder agreement with Linde Plc (and Schlumberger Limited) to develop a 9 million tonne/year CCS hub in Jubail. Under the agreement, Aramco will own 60%, while Linde and SLB will have 20% each. The 9 million tonne/year first-phase plant is expected to be operational by the end of 2027.
Aramco also aims to produce 11 million tons of blue ammonia from its Jafurah natural gas field by 2030. For over a decade, the company has explored potential technologies to produce low-carbon hydrogen from hydrocarbons, including Thermo-Neutral Reforming (TNR) with the goal of producing “blue” hydrogen from around two million tons of blue hydrogen – capturing CO2 emissions from production.
However, Aramco is likely to struggle to find a buyer for its blue ammonia, except in the chemicals sector: Chief Executive Amin Nasser revealed that blue hydrogen costs the equivalent of about $250 per barrel of oil, three times more than the current spot price of Brent. Whoever made the investment did not do the math well from an economic point of view .
“ It is very difficult to find an off-take agreement in Europe [for blue hydrogen]… and they explained to us that it is because of the high cost. Customers in Japan and Korea [which are planning massive H2 economies] are also waiting for government incentives. Until they get these incentives, it will be expensive for them to pursue blue hydrogen , ” Nasser said on a call with analysts. The production of hydrogen and derivatives is not economically convenient, at least at present, so everyone is waiting for money from governments.
Figuring out which of the multiple lines of research and development will work could take Aramco years, and time is not on its side. The company, however, rejected the idea of having to reduce fossil fuel production: “ We have never been a one-or-the-other company. Aramco is a great example of how emissions can be addressed and managed ,” said Ghazzawi, Aramco's head of strategy.
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The article Aramco vs. Energy Agency on the future of Oil and Energy comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/aramco-contro-agenzia-per-lenergia-sul-futuro-del-petrolio-e-dellenergia/ on Mon, 17 Mar 2025 12:00:09 +0000.