Saudi Arabia urges policy makers to think long term

Saudi energy minister Prince Abdulaziz today urged governments to be more "long-term" in their thinking when it comes to shaping their energy strategies and navigating the energy transition, or else risk the very real prospect of energy scarcity in the future.

"People [today] are driven too much by policies for the month, or two months or three," Prince Abdulaziz bin Salman told the Qatar Economic Forum.

Policy makers today have "policy blinkers" whereby many governments are taking decisions that will deliver on countries' short term needs, to "make sure you do whatever you can to get by on a day by day basis, or a month to month basis, or maybe even a six month basis."

But in Saudi Arabia and within Opec, "we are focused on the bigger picture," he said.

"Yes, the nuances of today, tomorrow and after tomorrow are crucial, but we need to deal with them tactically. The whole world needs not to forget that we have a future. We need to be brave enough, and courageous enough to attend to that future."

Like many of its counterparts in Opec, Saudi Arabia has been arguing for a more "balanced" approach to tackling climate change whereby oil and gas continue to play a part as the world transitions to cleaner forms of energy.

The kingdom's stance is that instead of shifting away from hydrocarbons — something many Western governments have been advocating to varying degrees — climate action should instead be aimed at containing emissions.

This would allow countries, particularly those in the developing world, to continue using oil and gas to help grow their economies, and also provide the assurances and certainty needed by investors to direct investment back towards upstream oil and gas.

Boosting supplies in the future is "not about turning the valve or building a pipe," Prince Abdulaziz said. "These things take a lot of time, and a lot of investment. But for investors to do what is needed, they need certainty. And now, we have a huge certainty gap — that is the real picture."

The Saudi energy minister's comments came just one day after Opec secretary general Haitham al-Ghais renewed his own calls for more upstream investment, warning that continued underinvestment could lead to "very real and dangerous consequences".

New energies

But this lack of clarity when it comes to policy making is not just hurting investment in traditional energies like oil and gas, Prince Abdulaziz said, but also in those same cleaner alternatives like hydrogen, ammonia or even renewables, that the world is hoping to shift towards.

When it comes to hydrogen, there are still significant question marks for aspiring producers of the fuel around the future markets and price they can expect.

"We are not even talking about oil, we are not talking gas," he said. "We are talking about the so-called cleanest of the cleanest fuel of the future. And yet you don't have the off-takers because again there are no clear policies for the off-taker to say I have been given an incentive package to enable me to buy that hydrogen, even green hydrogen, for that price for producers to produce it."

With all this uncertainty, and all these questions still unanswered, "how on earth can one envisage our energy future," he said.

By Nader Itayim