Peak oil: Saudi Aramco CEO says oil shortage is coming. Discoveries and investments are down.
The CEO of Saudi Aramco, Amin Nasser, recently told a conference in Istanbul that the world is heading toward an oil supply shortage as a result of falling discoveries of new conventional oil reserves and steep drops in new investment.
By James Ayre
This situation — peak oil for conventional oil fields, which was passed several years back, and the growing dependence on expensive “unconventional” options — is one that we’ve reported on numerous times now.
We’ve also reported on the way that the oil price crash of recent years has led to rapid increases in the debt levels at many oil companies, and a drop in new investments.
While taking an oil exec at their word when they’re discussing the oil market is probably ill-advised, Nasser is just stating the blunt reality of the situation — as far as general trends go, oil is only going to get more expensive as time goes by, as the cheap conventional oil sources are depleted.
“If we look at the long-term situation of oil supplies, for example, the picture is becoming increasingly worrying,” Nasser commented, as reported by Reuters. “Financial investors are shying away from making much-needed large investments in oil exploration, long-term development and the related infrastructure. Investments in smaller increments such as shale oil will just not cut it.”
To put a figure to that, around $1 trillion in new investments have been “lost” since 2014 or so. This only compounds the situation as regards the increasing difficulty of finding new conventional oil reserves. The easiest to find and develop have been in production for a long time now — what remains are the less attractive options.
“New discoveries are also on a major downward trend. The volume of conventional oil discovered around the world over the past four years has more than halved compared with the previous four,” Nasser continued.
On Saudi Aramco’s near-term plans, Nasser stated: “We plan to invest more than $300 billion over the coming decade to reinforce our pre-eminent position in oil, maintain our spare oil production capacity, and pursue a large exploration and production program centering on conventional and unconventional gas resources.”
Peak oil is bad… unless you WANT less fossil fuel use
It should be realized here that every time in recent years a country that is heavily dependent on oil production has surpassed peak oil, severe economic and social problems have followed. Syria and Egypt both make very good examples in that regard.
Over the mid- to long-term, Saudi Arabia is likely facing a similar situation — so the survival of the current regime is closely tied to the ability to maintain production levels. Hence the $300 billion pledged for investment.
While western media has pretty much stopped reporting on what’s happening in the country, I’ll note here that Egypt is continuing to come apart at the seams — food and water supply problems are growing day by day, and social breakdown + cultural/ethnic conflicts are as well.