Saudi Energy Minister Abdulaziz bin Salman on October 5, 2022.

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State-controlled Saudi oil giant Aramco has suspended its capacity expansion plans due to the green transition, Energy Minister Abdulaziz bin Salman said on Monday, emphasizing that the future of energy security lies in renewable energy.

“I think we postponed this [Aramco capacity] investment simply because… we are in transition. And the transition means that even our oil company, which used to be an oil company, became a hydrocarbon company. “It is now becoming an energy company,” the Saudi prince said during a question-and-answer panel at the International Petroleum Technology Conference in Dhahran, noting that Aramco has investments in oil, gas, petrochemicals and renewable energy.

On January 30, the Saudi Energy Ministry surprised markets with a directive ordering majority Saudi-owned Aramco, which went public in 2019, halt plans to increase its maximum crude oil production capacity from 12 million barrels per day to 13 million barrels per day by 2027. The ministry did not reveal the reason for its decision at the time, raising questions about possible Saudi concerns about the future of oil demand amid a energy transition in progress.

The Saudi Energy Minister clarified on Monday that the decision was not made hastily and was the product of an ongoing review of market conditions.

“We are in [a] continuous way of reviewing and reviewing and reviewing, simply because you have to see the realities [of the market],” he said.

Saudi Arabia's directive to Aramco was

Oil prices have been hit by waves of volatility in the wake of the Covid-19 pandemic, hit by lower-than-expected recoveries in Chinese demand and inflationary pressures. The global movement to decarbonize and avoid a climate crisis has diverted energy companies from long-term fossil fuel projects in favor of greener investment pastures, and may redefine the prospects for energy security, Abdulaziz bin Salman noted on Monday.

“Energy security in the 70s, 80s and 90s depended more on oil. Now, let’s look at what happened last year… It was gas. The future problem in energy security will not be oil. It will be renewable energy And the materials and the mines,” he stressed, noting that there is still a “huge cushion” of spare capacity available in the event of an emergency shortage. Previously, these supply shocks had come through sanctions or attacks on oil infrastructure around the world.

“Why should we be the last country to have energy capacity, or emergency capacity, when it is not appreciated? And when it is not recognized?” said the Saudi energy minister. “Energy security is not just the responsibility of Saudi Arabia. It is the responsibility of all energy producers and energy ministries.”

Notably, spare capacity has also long served as a diplomatic instrument in the Saudi-led Organization of the Petroleum Exporting Countries, shaping the odds of victory in the fleeting month-long price war between Riyadh and Moscow in 2020. .

Saudi Arabia and its OPEC allies have long advocated a blended energy transition strategy that uses fossil fuel resources until renewable supplies are available to fully meet global needs, downplaying concerns about markets imminently peaking. the old demand. The stance is in stark contrast to that of the International Energy Agency, which in a landmark 2021 report argued against increased investment in new fossil fuel supply projects if humanity is to combat the climate crisis.

However, Middle Eastern countries have increasingly sought to reconcile their image as staunch fossil fuel producers with their energy transition ambitions, and key OPEC producer the United Arab Emirates hosted the UN Conference. Climate-oriented UN Parties (COP) last year.

Saudi Arabia, the world’s largest oil exporter, aims to decarbonize by 2060, and Saudi Aramco aims to achieve net-zero operational emissions by 2050. Led by Crown Prince Mohammed bin Salman’s Vision 2030 plan, the kingdom has also been striving to diversify your economy. from excessive dependence on fossil fuels.