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The latest rash of high-scale oil and gas mergers and acquisitions is an indication that fossil fuels are here to stay, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said on Tuesday.
“Exxon, Chevron didn’t buy because they want to have stranded assets,” the Energy Minister said at Riyadh’s FII annual investment conference. He was referring to Exxon’s announcement of its $60B acquisition of Pioneer Natural Resources and Chevron’s $53 billion acquisition of Hess—both announced within two weeks of each other and sending waves in the oil industry as analysts try to interpret the bold moves.
Prince Abdulaziz said the same of its own motivations for investing in increasing the country’s oil capacity to 13 million barrels per day. “We are investing not to create a stranded asset,” he said, adding that Saudi Arabia wouldn’t be investing in increasing oil production capacity if there wasn’t demand for that increased production.
The comments come on the same day as the International Energy Agency published its World Energy Outlook, which claims that demand for crude oil, natural gas, and coal will all peak before 2030.
OPEC has already lashed out at the IEA’s claims, which see an end to the growth era for oil and gas, saying last month that “Such narratives only set the global energy system up to fail spectacularly. It would lead to energy chaos on a potentially unprecedented scale, with dire consequences for economies and billions of people across the world.”
OPEC sees oil demand growth continuing until at least 2045.
According to Abdulaziz, even amid an energy transition, hydrocarbons and petrochemicals will be required.
By Julianne Geiger for Oilprice.com
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.