While countering theories that demand will peak within years with his own forecast that consumption will keep growing for decades, the boss of Saudi Arabia’s state oil company defended petroleum as the mainstay of the global economy.
“The global economy is forecast to double in size by 2050” so overall demand for energy will be higher, Saudi Arabian Oil Co. Chief Executive Officer Amin Nasser said at the International Oil Summit in Paris. He said that “equally as misleading” as now-discredited theories about peak oil supply is the idea that oil demand is close to its maximum level.
However, recent opinions from some of the world’s largest oil companies are in stark contradiction to his comments. Total SA’s Chief Energy Economist Joel Couse said this week that demand for oil-based fuels is likely to peak in the 2030s because of the surge in battery-powered vehicles. The high point in consumption could happen in as little as five years, said Simon Henry, then the chief financial officer of Royal Dutch Shell Plc, in November.
However, there are also plenty of influential voices supporting Nasser’s argument. No peak in global oil demand before 2040 is anticipated by the International Energy Agency, which advises developed economies on energy policy. Agreeing with Nasser that crude will remain the most important fuel for decades, is Exxon Mobil Corp., the world’s largest oil company by market value.
There are good reasons to push against the notion that the world’s ever-growing appetite for oil could soon be sated for the state-run Saudi company, also known as Aramco. It is preparing for what could be the largest-ever initial public offering and it produces more than 10 percent of global crude supply. Determining investor appetite and the company’s final valuation, which analysts are already saying could be below the kingdom’s $2 trillion target, would be greatly influenced by the long-term outlook for demand and it will be a key component in this determination.
The IPO remains on track for the end of 2018 and Nasser said preparations for Aramco’s share sale are in order.
He said that amid the slump in crude prices, the world should focus on the “grave threat” to oil supplies resulting from the cancellation or deferral of about $1 trillion of energy projects rather than being concerned about peak demand.
Global benchmark Brent, which has fallen by more than half since mid-2014, added 53 cents, or 1 percent, to $51.97 barrel by 2:10 p.m. Singapore time.
(Adapted from Bloomberg)