Stanley Reed: Saudi Aramco's chief on future of oil
Fayez Nureldine/Agence France-Presse-Getty
‘Transformation is happening':
Amin Nasser, the chief executive of Saudi Aramco.
“We are in a market that is very dynamic,” he said.
As Saudi Aramco, the Saudi national oil company, prepares for a widely-awaited initial public offering next year, its chief executive, Amin H. Nasser, is at the center of the planning.
Mr. Nasser has run Aramco, which produces more oil than any other company in the world, since 2015, and also oversees a wide range of joint ventures and investments. Along with the public offering, Aramco is also crucial to Saudi-led efforts to cut oil production in an effort to buoy prices. Brent crude, the international benchmark, was above $100 a barrel in 2014 before tumbling sharply. It is now at about $60 a barrel.
He spoke to Stanley Reed, a New York Times reporter, on the sidelines of an event sponsored by the Oil and Gas Climate Initiative, a partnership of 10 international oil companies that aims to reduce greenhouse gas emissions from the industry.
Their conversation, edited for grammar, style and clarity, follows.
Q. How will the privatization, or initial public offering, help Saudi Aramco?
A. I think that privatization will definitely elevate, first, our international visibility as a company, our decision-making strategies, and also our achievements to date, and our governance. We know that we have excellent governance. A lot is not known about Saudi Aramco in terms of performance and all of that. So a lot of numbers can be shared later on, when we are listed.
You will see, first of all, a lot invested in technology to add more value. While everyone else cut technology spending, we are increasing our technology spending. We have eight technology hubs outside Saudi Arabia, and three inside Saudi Arabia, for a total of 11. Two of our technology hubs focus on better fuel formulation, less carbon footprint, more efficiency in car engines.
That all will hopefully, at a certain point, be shared with investors when we are listed.
Do you have any doubt that the listing will happen?
No, the listing is happening. You have confirmation from the Crown Prince this week, and our minister of energy and the minister of finance, all the stakeholders in the kingdom. It is happening in 2018.
Is Aramco working on renewables, like wind and solar power?
It is an important element of our strategy, to get into renewables. The kingdom, as I said, is looking at producing 9.5 to 10 gigawatts by 2023. So yes, we are interested and we are going to be a major player in renewables.
We have a long-term relationship with our customers. They appreciate our reliability, the quality of our products. We value all of these relationships. We are always there when the market goes down and there are not enough resources, because we do have the spare capacity and we always meet our obligations.
There is a requirement placed on the company, based on the cuts by OPEC members and non-OPEC members, and we are abiding by that guideline. Our customers and partners understand that issue and because of the long-term relationship, it is not impacting our business transactions with them. They value the partnership that we have together.
Are you losing market share?
Everything is temporary. We are in a market that is very dynamic, and so far things are going well. We are meeting our obligations in certain markets. And there has been no issue so far.
Are you happy with how the production cuts are working?
We are seeing inventories go down, which is great. Don't forget, it was just an additional supply of 2 million barrels that brought the price from $100 to $40. Now, you don't want the opposite to happen. You need to make sure there is ample supply.
You need to make sure inventories are balanced in a way where it meets the objectives of both the consumers and producers. So inventories are going down, prices are moving upward as a result of that balance between supply and demand.
Is there concern in Saudi Arabia that as renewables rise in importance, oil could become a stranded asset and lose its value?
We don't subscribe to that thought about stranded assets. We think that oil will have more value in the future, and that rational development of our oil assets should be done reasonably over a long time.
If you look today, the requirement is 98 million barrels per day. Over the last three years, demand has grown by 5 million barrels per day. Add to that, a natural decline of 5 percent in existing fields. So you need to bring additional crude reserves to the market to meet the natural decline, and to meet the additional demand that we are going to see.
So I think oil will remain for decades to come. Transformation is happening, but it is going to take a long time.
Stanley Reed, a London-based journalist, has been writing for The New York Times on energy, the environment, and the Middle East since 2012. Petroleumworld does not necessarily share these views.
This commentary was originally published by The New York Times, 10/27/2017.
Petroleumworld reprint this article in the interest of our readers and does not necessarily reflect the opinion of Petroleumworld and its owners.
Link to original article.
All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld.
All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld. Use Notice:This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by theoriginator.Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law.
If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. Internet web links to http://www.petroleumworld.com are appreciated.Copyright© 1999-2017 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.
Internet web links to http://www.petroleumworld.com are appreciated. Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!
Petroleumworld News 10/30/2017
We invite all our readers to share with us
their views and comments about this article.
Send this story to a friend Write to email@example.com
By using this link, you agree to allow PW
to publish your comments on our letters page.
Any question or suggestions,
please write to: firstname.lastname@example.org
Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8 +/ 800x600 pixels