Saudi Aramco sees a recovery for oil demand in the second half of 2021 and, in the longer term, hydrocarbons will continue to compete with energy transition options.
Aramco’s CEO Amin Nasser set out the company’s thinking while accepting The Chemists’ Club Kavaler Award, sponsored by ICIS.
The Saudi company is in the midst of change. It has recently completed the acquisition of Sabic and has acknowledged new pressures for action on carbon constraints.
“We’re at the beginning of a major transformation positioning Aramco for the future … we seek to create higher value products at scale, with lower emissions. We want to create a cleaner future for the planet.”
The roll out of a vaccine for COVID-19 is at the heart of Aramco’s expectations for the return of demand in 2021. Nasser even expressed some concerns about a lack of investment in the upstream. “As economies recover, we may see supply being constrained.”
For Aramco, though, Nasser highlighted the importance of chemicals. The company aims to convert a “significant part” of its production over the next two decades into petrochemicals. Certain geographies will dominate future demand.
This belief in the future of petrochemicals goes a long way to explaining Aramco’s decision to buy a major stake in Sabic. Aramco is still working on the integration process. Nasser said there may be scope for more acquisitions “in major growth markets – such as India and China – as part of our long-term strategy”.
It is this emerging demand for hydrocarbons that Aramco sees as balancing out energy transition demands. The energy transition will be a gradual process, the CEO said. People who lack access to electricity, and clean cooking fuels, will move first to hydrocarbon consumption.
“Conventional and new energy sources will run in parallel for many years to come. I see a future where oil will be produced with much lower emissions,” Nasser said. Aramco has been working on various energy transition strategies. These include a shift to gas production, blue hydrogen and support for renewables.