Kuwait Petroleum CEO: No Alternative To Oil, Gas In ‘Foreseeable Future’
Forecasts of a steep reduction in oil and gas demand by 2050 do not add up because a viable replacement does not exist, according to Shaikh Nawaf Saud Al Sabah.
The deputy chair and CEO of Kuwait Petroleum Corporation spoke at the World Petroleum Congress in Calgary this week.
“The way we look at it in Kuwait is this is an energy transition and not an energy switch,” said Al Sabah. “It requires quite a bit of time to move through the energy position we are in right now to the end state where we need to be.
“When we looked at what the end state is going to look like, when we look at 2030 or 2050 even, we see that in any of those energy mixes there will be an essential role for oil and gas,” he added. “Because, having a policy that is an either/or doesn’t make any sense when the world essentially needs an … all-of-the-above, essentially, as part of the energy mix.”
Al Sabah noted the need for this mix to include renewables such as solar and wind, among others. He, added, however, “it is going to have to continue to include hydrocarbons for the simple reason all the other ones will not be enough to power the world.”
The CEO touched on the world’s anticipated population increase by 2050 and corresponding energy demand.
“That energy is going to have to come from some place,” Al Sabah said, adding he expects an “essential part of that pie will be oil and gas.”
Moderator Jackie Forrest, executive director of ARC Energy Research Institute, brought up the International Energy Agency’s (IEA) forecast on oil and gas demand.
In its World Energy Outlook 2021, the report says, “If all today’s announced climate pledges are met, the world would still be consuming 75 million oil barrels per day by 2050 — down from around 100 million today — but that plummets to 25 million in the Net Zero Emissions (NZE) by 2050 Scenario.”
“The IEA’s estimate cannot put forward any credible alternative to oil and gas in the energy mix that will get the world the energy that the world is going to demand by 2050,” said Al Sabah.
“There is no mechanism to get you there right now,” he added. “I think the IEA recognizes that and if you read the fine print and foot notes, you will see that it relies on essentially a huge leap of faith on new technology that’s magically going to appear at some point in the future. That is not a way to plan for the future. That is a recipe for disaster.”
Al Sabah said he thinks Kuwait is in a prime position based on the carbon intensity of its bbls.
“One example, IOCs (international oil companies), some of their CEOs, friends of mine are quite proud of coming in at somewhere around 15 kilograms of CO2 equivalent Scope 1 Scope 2 emissions per barrel of oil produced. When they say that I say, ‘thank you very much, we are at a third of that if not less.’
“So, we start from a good position but then the question becomes: how do we maintain that position and then move ultimately to a net-zero target?”
His company is launching a net-zero strategy soon.
“That will entail massive investments and require a massive amount of collaboration, we need across the industry,” said Al Sabah. “Not just on the oil and gas companies but also the research institutions and frankly universities and … service companies.”
Decarbonize not replace
Al Sabah was asked for his thoughts going into COP28 in Dubai this November.
“We are excited by it because we feel this is the time where everyone will have a seat at the table and people will be able to have an open, frank dialogue,” he said.
“In the past, we see a dialogue that was … holding oil and gas to be essentially the devil that had to be exterminated, without realization that there is no alternative to that industry at this time, or anytime in the foreseeable future and we have to work together to decarbonize the barrel and not to replace it.”
Al Sabah pointed to the challenges around a world economy that indicates need for oil and gas but only for a set period of time.
“We want more investment, we want more quantities of it now, but we don’t want it the day after tomorrow,” he said, summing up this sentiment. “That is a recipe for disaster because companies, especially the major producers will not want to make the major investments [that] are going to have to be made to ensure that supply is available in the market, unless there is some sort of security of demand into the future.”