The cause of the energy crisis? The irrational investments made in the past years, for a wrong transition

Years of underinvestment in oil and gas production are the root cause of the current energy crisis, and when the global economy recovers from the current slowdown, the little oil production capacity that remains will be wiped out, he said Tuesday . CEO of Saudi Aramco, Amin Nasser.

"Many of us have insisted for years that if investments in oil and gas continue to decline, global supply growth would lag behind demand, with repercussions on markets, the global economy and people's lives" , the CEO of the world's largest oil company and leading oil exporter said today at the Schlumberger Digital Forum 2022 in Switzerland.

Investments in oil and gas more than halved between 2014 and 2021, Nasser said, adding that "this year's increases are too few, too late, too short-term." In 2014, annual investments in oil and gas amounted to $ 700 billion, down to just over $ 300 billion last year, Aramco's top executive said.

“These are the real causes of this state of energy insecurity: insufficient investments in oil and gas, not ready alternatives and no backup plans. But that would not seem like the answer given so far ”, he added, reiterating an opinion long supported by Saudi Arabia, according to which the lack of investments of previous years will hit the energy supply again.

“Even in the presence of strong headwinds to the economy, global oil demand is still quite healthy,” Nasser said.

“But when the global economy recovers, we can expect a further rebound in demand, eliminating the little spare production capacity. And when the world sees these blind spots, it may be too late to change course, ”he added.

"That's why I'm seriously worried."

Saudi Aramco has once again called for more investment in the oil and gas sector, especially for capacity building. "And at least this crisis has finally convinced people that we need a more credible energy transition plan," added Aramco's chief executive.

Saudi Arabia plans to increase its production capacity to 13 million barrels per day (bpd) by 2027, from about 12 million today, but not much further. The Kingdom is one of two major oil producers believed to have additional reserve capacity. The other producer is fellow OPEC member, the United Arab Emirates (UAE).

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This is a machine translation of a post published on Scenari Economici at the URL on Thu, 22 Sep 2022 14:40:15 +0000.