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CEO remarks at the Oil and Money Conference

Presdient & CEO Nasser at Oil and Money

Speech|LONDON, United Kingdom|

Good morning, ladies and gentlemen. It is a pleasure to join you today at one of our industry’s premier venues to deliberate on current energy issues of strategic importance to our world.

Let me first congratulate my friend Ben van Beurden for his well-deserved Energy Executive of the Year award. Congratulations Ben.

Let me also stress that this event offered further proof of how important oil and our industry remain to world energy and the global economy. That would have affected many industries, companies, the global economy and more importantly consumers across the world, because of the unique position and scale of Saudi Aramco.

Allow me to begin by addressing last month’s brazen attacks on some of Saudi Aramco’s key oil facilities, given the continued public and media interest in our recovery efforts.

Thanks to the tireless efforts of our people, their creativity, and the high degree to which our supply and service chains have been localized in recent years, the most urgent work essential to production restoration was prioritized.

It was expedited and completed, beating our own target by about a week. That took us back to pre-attack production levels. We are also on track to regain our maximum sustained capacity, or MSC, of 12 million bpd by the end of November, as we announced. That too might come earlier than the target.

This rapid turnaround has surprised many, but our people are known for extraordinary performance when they are put to the test—and I am proud of the men and women of Aramco for the way they rose to this tough challenge.

Additionally, the optimum flexibility and planned fail-safe redundancies built into our facilities and our vast production network proved instrumental in accelerating the restoration work.

The sharp oil market reaction following the attacks on our facilities reflected understandable supply concerns. But Saudi Aramco’s rapid response and the confidence our various stakeholders have in our ability to quickly restore production helped to calm the global oil market.

In the absence of those capabilities, and had the market believed the supply loss would be longer term, the reaction would have been much steeper and more sustained.

So make no mistake, ladies and gentlemen: These attacks not only struck Saudi Aramco and Saudi Arabia, but also targeted the global economy and indeed the wider global community.

That means an absence of international resolve to take concrete action may embolden the attackers and indeed put the world’s energy security at greater risk. Saudi Aramco, for its part, remains committed to ensuring reliable supply and access to energy the world needs, which I believe is key to the future health of our industry.

However, we need to engage with all stakeholders in our industry’s future regarding the linkages to greenhouse gas emissions and climate change, which are of critical importance to all of us.

In my view, it is appropriate to continue this dialogue at this conference by examining global approaches to managing climate change.

In light of last month’s discussions at the United Nations Climate Summit, it is useful to ask: Is the current approach to reducing greenhouse gas emissions producing acceptable results? In my judgment, the answer is “no”—and here is why.

Simply speaking, thus far the world has focused on just two fixes: replacing hydrocarbons with renewables in the power sector, and on electrifying light duty road passenger transport via electric vehicles.

The serious flaw in this approach is its exceptionally narrow focus, as electricity accounts for roughly a quarter of global greenhouse gas emissions and light duty passenger vehicles only about eight percent.

In other words, the focus on only about one-third of total GHG emissions. And that is why I strongly believe we need to think differently.

In my view, we could consider four key strategies that have the potential to make the global effort much more effective.

First, we must go beyond electric power generation and light duty passenger transport, broadening our focus and paying attention to all the other economic sectors that jointly account for about two-thirds of global greenhouse gas emissions.

Second, most clean R&D and technology funding by governments is currently focused on emerging energy sources, and this must be extended to the existing energy sources that will be with us for a long time to come.

Third, we should concentrate on moving toward a Circular Economy: an economic system focused on the elimination of waste and the sustainable use of resources, which could be characterized by the three Rs of Reducing, Reusing and Recycling.

This compares to a traditional Linear Economy in which raw materials are mined or extracted, processed, and turned into products, but then are simply thrown away after one use rather than being remade, repaired or recycled.

Carbon and a wide variety of other materials and resources can be similarly transformed into circular systems. In other words, we need to “close the loop” to the maximum extent possible.

And fourth, let us take advantage of the greenhouse-gas reduction synergies across economic sectors offered by the circular economy, which will be lost if we work on various sectors in isolation, or focus only on a selected few.

Ladies and gentlemen, in my view, this more comprehensive approach is vital, because looking at the global energy mix for the foreseeable future, I see both new energy sources and existing sources contributing in parallel.

Without a doubt, oil and gas will be here for many decades to come. But there can also be no question that climate change is among the most significant challenges facing humanity.

At the recent World Energy Congress in Abu Dhabi, I talked about society’s five key demands for the future of energy, which are: resource abundance, safe production, reliability, affordability, and cleaner supplies.

I also stated that our industry recognizes the need to deliver on those demands, is making urgent efforts to further reduce carbon emissions associated with oil and gas, and has made that objective one of our industry’s top priorities.

For its part, Saudi Aramco is working both individually and jointly with others in the petroleum industry to reduce greenhouse gas emissions. In fact, Aramco has a long history of reducing all emissions, including greenhouse gases, even well before climate change was identified as a global challenge.

For example, our Master Gas System was built in the 1970s, and by eliminating flaring, the CO2 reduction through this system alone has averaged some 100 million tons every year.

Looking at climate-sustainability KPIs within our gates, we are proud that today the carbon intensity of our upstream operations is among the lowest in the industry: 10 kilograms of CO2 equivalent per barrel of oil produced.

Based on third-party verification, last year our intensity of highly harmful methane gas was just 0.06 percent, also one of the lowest levels in the industry. In addition, we are emphasizing cogeneration in our operations, achieving more than 70 percent thermal efficiency.

With more than 2.2 million mangrove seedlings already planted through an Aramco-sponsored program, we have also launched a campaign to plant one million trees across the Kingdom to absorb carbon and enhance biodiversity, while also prioritizing water conservation as well as its treatment and reuse.

Outside our gates, in the area of end-use oil applications, we are working on a variety of low-carbon technologies.

These range from the higher-mileage and lower-carbon integrated engine-fuel systems of the future; carbon capture utilization and storage (CCUS); beneficial uses of carbon; and clean hydrogen from oil as a key energy source to fuel a potential future hydrogen economy.

At an industry level, I’m pleased to say that the CEO-led Oil and Gas Climate Initiative, of which Aramco is a founding member, has made great strides in delivering effective solutions for a sustainable low-emissions future.

Ladies and gentlemen, in summary I believe both existing and new energy sources will be needed to satisfy our planet’s needs for energy and economic development, while concurrently promoting climate protection.

However, the world’s current carbon management strategies are too narrowly focused. Instead we need to make GHG reduction efforts across all economic sectors, to direct clean energy R&D and technology funding toward both existing and new energy sources, and adopt the circular economy model.

Our industry is fully committed to further lightening the greenhouse gas footprint of oil and gas.

We are backing our words with concrete action. By the same token, I urge governments around the world to work closely with us to develop pragmatic policy solutions to deliver ample, reliable, safe, affordable and at the same time sustainable energy to the world.

I’m confident that with all stakeholders working together toward rational solutions, this goal—while challenging—is achievable. Thank you.

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