Your Royal Highnesses, Your Excellencies, distinguished guests, ladies and gentlemen, good morning.
I would like to thank our Emirati hosts for their hospitality; and the World Energy Council for organizing yet another outstanding event.
Throughout our history, our competitive edge can be summarized in four core attributes: resource abundance, safe production, reliable supply, and affordability.
But meeting society’s expectations of sustainable energy will require a fifth.
Quite simply, our products need to be much cleaner.
This will be my main focus this morning.
But let me start with the undeniable link between our first four attributes and global economic development. To begin with, by ensuring access to ample energy, our industry continues to power economies and lift billions out of poverty.
Next, despite a variety of challenges, by making safe production and reliable supply the cornerstone of everything we do, we are trusted by our customers around the world.
Then there is affordability, and our industry truly appreciates its importance for consumers in both developed and developing nations.
But preserving our competitive advantages requires constant vigilance. Despite great progress, roughly one billion people still lack access to reliable electricity, and most of them live in sub-Saharan Africa.
Meanwhile, close to three billion people still rely primarily on unclean biomass, wood, and coal for their cooking needs, with more deaths each year from indoor pollution than HIV-Aids and Malaria combined.
And with Africa’s population alone set to triple by the end of the century to over four billion people, one thing is clear: acute energy poverty will remain a huge challenge. It would be inhumane to ignore the issue, wish it away, or dismiss our industry’s central role in tackling it.
We must also continuously remind all our stakeholders that we are a global industry at the cutting-edge of science, technology, engineering, and logistics, supported by a complex, global supply chain.
Even when we have genuine breakthrough moments, they take time and massive investments to commercialize and roll-out across the global energy network. In addition, all energy transitions (including this one) take decades, with many challenges along the road.
Certainly, we support the growing contribution that alternatives are making to meet rising global energy demand. But many governments are adopting energy policies that do not appear to consider all the complex aspects of global energy; the long-term nature of our business; and the need for orderly transitions…
…policies that seem to assume there are quick and easy answers to the many challenges alternatives face.
…policies that also seem to assume rapid electrification of transport, overlooking the issue of clean electricity and a life-cycle measurement of greenhouse gas emissions…
…and policies that will cost tens of trillions of dollars, with the burden often falling on those who can least afford it…
We have already seen the impact of what I call a ‘Crisis of Perception’ on long-term investments; and if it continues supply shortfalls will follow as night follows day. That would hurt the competitiveness of national economies; threaten their energy security; and, potentially, create social disruptions (even in developed nations) by making energy less affordable.
The world can no longer afford such policy miscalculations. We need a major awareness campaign to remind stakeholders and energy users why oil and gas are still so essential. And since oil and gas will be at the heart of the global energy mix for decades to come, we need regulators to be policy holistic and technology agnostic.
So there is plenty of work ahead of us just to sustain our traditional strengths.
But the world still turns, and our industry’s ability to turn with it is crucial.
Two hundred years ago, for example, in places like the United States and Europe, many people used indoor lamps fueled by oil from whale fat. But by the mid-1800s, following the discovery of oil, kerosene became the lighting fuel of choice.
The journalists and analysts of the day were probably going wild about peak whale demand! Kerosene was then challenged by electricity, putting the entire petroleum industry at risk.
But once gasoline was recognized as a fuel source for transport – not just as a waste product – we secured our own future and transformed the whole world.
I believe we are at a similar turning point today. In particular, we have heard, loud and clear, the call from stakeholders and society at large for cleaner energy.
The good news is that we are not starting from scratch. For example, at Saudi Aramco, our Master Gas System has ended associated gas flaring, eliminating about 100 million metric tons of CO2 equivalent, every year since it was established in the 1970s.
Our upstream carbon intensity in the Kingdom – from well to refinery gate – is one of the lowest in the world at about 10 kilograms of CO2 equivalent per barrel of oil equivalent.
Meanwhile, based on third party verification of our greenhouse gas emissions, our methane intensity last year was just 0.06%, which is also one of the lowest in the industry. This is especially important given that methane gas is 80 times more harmful to global warming in the first two decades after its release compared with CO2.
High-impact achievements like these, together with our long focus on sustainability and environmental stewardship, mean we have a good story to tell. But these are primarily stories of success inside our gates.
Is that enough to meet society’s demands? The simple answer is “no”.
The world faces an incredible climate challenge and we need a bold response to match. In my view, that means the entire industry must come together around a new mission beyond our gates of making oil and gas much cleaner across the full spectrum of end-use applications.
And make it our most urgent priority. Again, our industry has already made progress. In the EU, for example, over the past 30 years, there have been dramatic reductions in conventional pollutants.
Carbon monoxide from road transport has fallen by 88%; non-methane volatile organic compounds by 89%; and sulfur oxides by 99%. As for CO2 emissions, on average, new passenger cars in the EU-27 emitted about 185 grams per kilometer in 1995.
They are targeted to be roughly half those levels by 2021, thanks in part to our industry’s work with the automotive industry. But all this still leaves a massive task ahead if we are to meet society’s expectations.
That is why, at Saudi Aramco, we are working hard on a range of technologies with transformative potential beyond our gates.
- advanced integrated engine-fuel systems of the future, which aim to deliver greater efficiency and, at the same time, lower emissions.
- crude-to-chemicals, which has the potential to transform our industry with oil as a highly competitive petrochemical feedstock.
- We are also working on carbon-free hydrogen from oil-based feedstocks for use in multiple end-use applications.
- We aim to be world leaders in Carbon Capture Utilization and Storage – once again turning what is seen today as a waste product – CO2 – into something valuable.
- And imagine advanced materials from oil which could be used in a range of high growth industries such as construction, housing, cars, and even the Electric Vehicles and renewables industries!
However, this new mission is a shared industry responsibility to our stakeholders, beyond generating long-term value for shareholders. Our concerted, accelerated, and visible response in all sectors should reflect that – especially collective investment in practical solutions.
For example, members of our industry’s Oil and Gas Climate Initiative have jointly allocated more than one billion dollars to lower the carbon footprint of the energy and industrial sectors.
Other, complementary approaches, especially coalitions with partners beyond our industry, should also be considered. Whatever the framework, it needs to be a comprehensive, industry-led effort, it needs to move fast, and it must articulate clear, long-term carbon management strategies that give our stakeholders sufficient confidence in our programs.
Because there is no limit to our industry’s potential if we can meet society’s demand for ultra-clean energy.
Ladies and Gentlemen, there is so much for our industry to be proud of.
Especially the hard work all of us have done on conventional emissions and carbon management inside our gates. But by coming together to play a transformative role beyond our gates, and making it our top priority, we can offer all five of the core attributes needed in future energy…
This is a mission-critical moment. And at this latest turning point in our history we must, once again, lead the turn.