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Aramco CEO Warns of Oil Supply Crunch Ahead

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Saudi Aramco CEO Amin Nasser warned on Tuesday of a looming shortage of oil if global investment in the energy sector does not keep pace with recovering demand. "Yes, there is a concern that we might end up with a supply crunch over the mid to long term if this level of investment is not corrected looking forward," Nasser said in an interview during the Energy Intelligence Forum. He pointed to the most recent report from the International Energy Agency showing that investment in the upstream industry this year is down by one-third compared to 2019. At the same time, Nasser was optimistic about the world's appetite for oil and said global demand had already started to recover from big hit it took from the coronavirus pandemic. "The worst is definitely behind us," Nasser said. "We are seeing a recovery … [and] most of the demand comes from the developing countries. We see a big pickup from East Asia -- especially China." Like most large oil companies, Aramco has reduced its capital spending in line with a big drop in revenue. The oil giant cut its investment by around $8 billion this year compared to 2019 to a total of $25 billion to $30 billion. This has forced the company to slow down some of its projects and initiatives. For example, Aramco's plans to expand its investment in LNG slipped from a short-term goal to a longer-term one. While placing its confidence in Saudi Arabia's vast and low-cost oil reserves of over 260 billion barrels, Aramco is also continuing to invest in technologies that will reduce its greenhouse gas emissions, such as carbon capture and storage (CCS), and also working to lower the company's methane emissions intensity. Aramco's greenhouse gas emissions amounted to 10.4 kilograms of carbon dioxide per barrel of oil equivalent last year and in 2018 its methane emissions intensity was 0.06% -- which are among the lowest in the industry. Nasser said the energy industry in general has been "responsive and responsible." Last year, Aramco became a listed company with a record-breaking public share offering on the kingdom's Tadawul stock exchange. Asked if Aramco is ready for an international listing, Nasser said the company underwent all the procedures needed to qualify for any type of listing, but added that the final decision on a future listing is up to Aramco's majority stakeholder, the Saudi state. Amena Bakr, Dubai

Topics:
Oil Demand, Oil Supply
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