Global oil industry needs $20 trln investment over 25 years: Nasser

The global oil industry needs over $20 trillion in investment over the next quarter century in order to meet rising demand, Saudi Aramco CEO Amin Nasser said at a conference on Tuesday.

“This staggering amount will only come if investors are convinced that oil will be allowed to compete on a level playing field, and that oil is here for the foreseeable future” Nasser said, speaking at the CERA Week conference in Houston, Texas.  

The industry has already lost $1 trillion in investment since the latest downturn, he added.

Outlining the measures needed to meet growing demand, Nasser reiterated that oil producers need to invest in expanding exploration.

“Last year only 7 billion barrels of oil equivalent were added, the lowest on record,” he said.

Moreover, oil majors also needs to offset the decline in developed oilfields, with even conservative estimates suggesting that 20 million barrels per day of new capacity is required over the next five years.

“We must challenge mistaken assumptions about the speed with which alternatives will penetrate markets. Alternatives will not be ready to shoulder the burden of supplying adequate and affordable energy for some time,” the CEO said, noting that penetration by alternatives will also vary greatly between developing and developed countries.

However, demand for oil will remain healthy in most existing sectors, and many non-combustible and new uses for oil will also be developed, he said at the event.

“In other words, I am not losing any sleep over peak oil demand or stranded resources. Oil and gas will continue to play a major role in a world where all energy resources will be required for the foreseeable future.”

Oil market fundamentals also remain strong, despite the price volatility, he said, adding that the market is expected to strengthen further “once the seasonal factors begin to fade.”

Meanwhile, investment in research and development (R&D) and innovation by companies in the sector will further lighten the carbon footprint of proven energy sources and technology, Nasser said.

In terms of R&D, Saudi Aramco has been actively looking at ways to achieve lower carbon footprint, namely in terms of developing new engines, better fuel formulation, and carbon capture utilization and sequestration.  

“Another focus area is in terms of what we can do to diversify our income. Today, we can convert 45 percent of our crude commercially to petrochemical, but we need new technologies to convert more of our crude to petrochemicals and that can only happen if you reduce your capital costs,” Nasser said.

The oil giant is now looking to convert 70 percent of the barrel to petrochemical, as well as reducing capital costs.

This, in turn, will reduce petrochemical prices in the future and allow them to penetrate new sectors like construction and automotive, the chief executive said.