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Saudi Aramco warns global energy crisis would worsen as demand rises from aviation and China

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The head of the world’s largest oil company clarified that the current energy crisis dates back to before the covid pandemic -19 due to poor transition policies towards renewable energies.

The global energy crisis may worsen further as demand in key sectors recovers, warned the CEO of Saudi oil company Saudi Aramco, Amin Nasser.

“World is running with less than 2% of available capacity . Before covid-19, the aviation industry consumed 2.5 million barrels of oil per day more than today. If the activity of the aviation industry starts to accelerate, there will be a big problem,” Nasser told Reuters on the sidelines of the World Economic Forum in Davos.

Furthermore, the coronavirus restrictions imposed in China will not last for long and therefore the global demand for oil will return to grow, he noted. Shanghai authorities are already easing lockdown measures after seven weeks, with the aim of returning to normal life in phases from June 1.

The crisis started before the pandemic

While Russia’s military operation in Ukraine and the sanctions imposed by the West in retaliation against Moscow, oil prices shot up, this “would have happened” anyway because the current energy crisis dates back to before the conflict, clarified the head of the world’s largest oil company. “We were going through an energy crisis due to lack of investment, and it began to be felt as a result of the pandemic,” he added.

According to Nasser , the world is facing a major shortage of oil supply, as most companies are afraid to invest in the oil sector due to the pressures of renewable energy policy. The energy transition process was often chaotic and disruptive, he lamented.

“There is no good plan. When you don’t have plan B ready, do not demonize plan A”, said the Executive. Many politicians and institutions such as the International Energy Agency or the United Nations Conference on climate change “say that by 2030 we no longer need [a las petroleras], so why build a project that takes 6 or 7 years to materialize it?”, he questioned.

Increased use of coal

Nasser believes that missteps during the global energy transition would only encourage greater use of coal by developing countries. “For the governments of those nations, the priority is to put food on the table for their people. If coal can do it at half price, they will do it with coal,” he valued.

On the other hand, he stressed that Saudi Aramco cannot rapidly expand its production capacity despite Western requests to do so. He insisted that the oil company would stick to its original goal of expanding capacity to 13 million barrels per day from the current 12 million by 2027.

“If we could do it [ampliar la capacidad] before 2027, we would have done it. This is what we tell politicians. It takes time,” he concluded.

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