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Saudi Arabia’s former oil minister, Ali al-Naimi, is not worried about demand forecasts that suggest OPEC may have a hard time keeping prices high enough for everyone’s comfort thanks to the growing adoption of renewable energy systems and electric vehicles—the goal of climate change policies around the world.
Al-Naimi expressed his confidence that falling demand in certain industries will be compensated for by other segments, but stopped short of providing details.
Petrochemicals are seen as a major growth segment for the future of oil while demand for fuels declines as electric vehicles on the roads of the world multiply. Aramco is investing heavily in petrochemical projects, and it doesn’t seem overly concerned about electric cars, perhaps with good reason.
Despite all the optimistic forecasts about EV adoption amid a string of government plans to phase out all internal combustion engine vehicles in the coming decades, over the medium term at least, ICE engine vehicles will continue to greatly outnumber EVs — even the optimistic forecasts agree on that point.
In tune with these projections, Aramco is investing in fuel-efficient engines in partnership with a U.S. lab. But at the same time, Saudi Arabia, which has an estimated 260 billion barrels of crude in reserves, is planning major renewable installations. That’s as clear an acknowledgement that renewables are here to stay as any.
Al-Naimi also acknowledges it. Speaking at an even in Bahrain, the former official said Saudi Arabia should diversify into minerals such as silica and into solar power.
Last month, the incumbent in Saudi Arabia’s Energy Ministry, Khalid al-Falih, said that the Kingdom’s total mineral resources are worth north of US$1.3 trillion, and that’s just the value of the raw materials, not counting the products that they can be turned into, al-Falih said. There are plans to increase Saudi Arabia’s base and precious metal production tenfold and make it one of the top ten aluminum producers globally.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.