The head of Saudi Aramco, Amin Nasser, has warned of a global oil shortage on the horizon, after a decade in which the energy industry turned its back on the search for new oil.
Nasser called for a return to spending on exploration and production as global demand for oil continued to grow, saying current investment was “extremely low.”
“We had a decade...where people didn’t explore. It’s going to have an impact,” Nasser told the Financial Times. “If it doesn’t happen, there will be a supply crunch.”
He also warned the US shale boom that had flooded the world with oil for a decade and a half was unlikely to be repeated.
“Eighty to 90 percent of growth came from shale,” he said. “If you look at the next 15 years, shale is most likely to plateau and decline. Where are you going to bring the additional barrels to meet the demand?”
Nasser said that as it typically took five to seven years to bring new projects online, the world’s future supply rested on the actions companies took now.
“We monitor final investment decisions and you can see a big drop in decisions and projects that are coming into the market,” Nasser said, adding that Aramco was spending $1bn-$2bn annually on exploration.
“For us, it’s strategic. We’re exploring and adding significant amounts of reserves.”
According to the Financial Times, his comments echo growing industry unease about reserves and long-term supply, with BP, Chevron, ExxonMobil and TotalEnergies all saying recently that they wanted to step up exploration and production.
The chief executive of Malaysian state oil company Petronas, Tengku Muhammad Taufik, told this week’s Energy Intelligence Forum that “more exploration” was needed, saying there was “a vacuum that needs to be filled.”
Vicki Hollub, chief executive of Occidental Petroleum, told the London conference that only a quarter of the world’s annual oil consumption was being replaced through new discoveries.
“It’s not just investment that’s the problem, it’s finding the bigger reservoirs,” she said, adding that ExxonMobil’s giant discovery in Guyana would only meet a small slice of global oil demand.
“When you have the best discovery that has been made in the past couple of decades producing only enough to cover one-third of the demand in one year, that’s a big issue.”
