The boss of Saudi Arabia’s state oil company defended petroleum as the mainstay of the global economy, countering theories that demand will peak within years with his own forecast that consumption will keep growing for decades.
“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. The idea that oil demand is close to its maximum level is “equally as misleading” as now-discredited theories about peak oil supply, he said.
His comments contradict recent opinions from some of the world’s largest oil companies. The surge in battery-powered vehicles will cause demand for oil-based fuels to peak in the 2030s, Total SA’s Chief Energy Economist Joel Couse said this week. In November, Simon Henry, then the chief financial officer of Royal Dutch Shell Plc, said the high point in consumption could happen in as little as five years.
Nasser also has plenty of influential voices supporting his argument. The International Energy Agency, which advises developed economies on energy policy, doesn’t anticipate any peak in oil demand before 2040. Exxon Mobil Corp., the world’s largest oil company by market value, agrees that crude will remain the most important fuel for decades.
The state-run Saudi company, also known as Aramco, has good reason to push against the notion that the world’s ever-growing appetite for oil could soon be sated. It produces more than 10 percent of global crude supply and is preparing for what could be the largest-ever initial public offering. The long-term outlook for demand will be a key component in determining investor appetite and the company’s final valuation, which analysts are already saying could be below the kingdom’s $2 trillion target.
Nasser said preparations for Aramco’s share sale are in order and the IPO remains on track for the end of 2018.
Rather than being concerned about peak demand, the world should focus on the “grave threat” to oil supplies resulting from the cancellation or deferral of about $1 trillion of energy projects amid the slump in crude prices, he said.
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.