Aramco CEO sees oil demand recovery by 2022

Saudi state-controlled Aramco's chief executive Amin Nasser is more bullish on the prospect of a demand recovery than the IEA, but cautioned that any prognosis depends on how the Covid-19 pandemic develops and on the emergence of a vaccine.

"My prediction [is that] hopefully we will recover by 2022, I know the IEA is talking about 2023," Nasser said today at the Energy Intelligence Forum. Earlier today the IEA said that demand returns to pre-pandemic levels by 2023, based on existing and announced policies and targets, and assuming that the pandemic is under control by next year.

Regardless, "the worst is definitely behind us," Nasser said. He said that global demand is around 90mn b/d, with the recovery concentrated in Asia-Pacific. Demand in China is almost at pre-Covid-19 levels, he said.

Nasser also cited an IEA warning from earlier this year that global investment in upstream energy is one-third lower than it was a year ago, and if that trend were to continue through 2025, "9mn b/d of supply will disappear."

"Yes, there is a concern we might end up with a supply crunch if these levels of investment continue," Nasser said today. Most investments are going into short-cycle projects, and there is a need for investment in long-cycle projects, he said. Nasser said in August that Aramco plans to increase its sustainable capacity from 12mn b/d to 13mn b/d at the Saudi government's request.

Aramco has reacted to this year's demand crunch by cutting its capital expenditure (capex) plans to around $25bn this year, from $35bn-40bn, and has said that it will cut capex next year from the planned $40bn-45bn. It is stretching out some projects, such a heavy offshore field development, and its plans for involvement in LNG projects have moved from the short term to the medium and long term. Aramco is involved in an LNG export facility in on the US Gulf Coast with Sempra Energy, but a final investment decision (FID) has been delayed to 2021.

Nasser said that development of domestic gas remains an Aramco priority, and said that the firm plans to take part in programmes to develop domestic renewable energy sources, particularly wind and solar power, in line with a government goal for renewables to provide 50pc of the energy mix by 2030.

Aramco is also exploring the possibilities of producing blue hydrogen, which would be suitable for utilisation in heavy transport, said Nasser. But he pointed to the need for much work to reduce processing costs and ensure the availability of suitable reservoirs for carbon capture and storage (CCS), or to find appropriate uses for associated CO2 such as turning it into a product like polymers. Aramco is working on a pilot CCS programme in Saudi Arabia's north, said Nasser, without providing further details.

Aramco last month exported what it said was the world's first shipment of blue ammonia, which it produced by converting hydrocarbons to hydrogen and then ammonia. The cargo went to Japan for use in power generation without producing CO2 emissions.

Nasser again addressed the prospect of an overseas listing for Aramco. He said while the company, which carried out a domestic IPO of 1.5pc of its shares last year, has been made ready to meet any global exchange requirements, any decision on a foreign listing would be up to shareholders. The government owns around 98pc of Aramco.

By Samira Kawar