Saudi Arabia says global oil production could fall by 30% by the end of the decade due to falling investment in fossil fuels.
Saudi Energy Minister Prince Abdulaziz bin Salman told a budget meeting in Riyadh:
“If energy spending is insufficient, we may be heading to a very dangerous stage. The result may be an energy crisis. To some extent, I am not predicting but warning that spare capacity will disappear.”
Spare capacity is an important buffer for oil markets because it allows producers to quickly respond to unexpected production outages that could tighten market supply and cause large price swings.
Abdulaziz said reduced investment in exploration and drilling could reduce daily oil production by 30 million barrels by 2030. He said oil will account for 28% of energy demand until at least 2045, compared with 30% in 2020.
Global spending on oil and gas projects fell 30% to $309 billion in 2020, with only a slight recovery this year, according to the Riyadh-based International Energy Forum.
Abdulaziz urged energy companies and investors to ignore “scary information” about oil and gas. He said Saudi Arabia will be one of the few countries to increase oil production capacity in 2022, and Saudi Arabia plans to invest 142 billion riyals in energy distribution by 2030. He also said that if oil demand shrinks in the future, OPEC producers will take a larger market share.
Abdulaziz added that he was calling OPEC ministers every day and that the OPEC+ December meeting had not been suspended.
Earlier, the Saudi Finance Minister also issued a similar warning. Their views differ from those of most climate activists, who believe action must be taken to slow global warming. The International Energy Agency (IEA), which advises rich countries, has called for a halt to new investment in fossil fuels if the world is to neutralize carbon emissions by 2050.
Saudi Arabia is the world’s largest oil exporter and one of the few countries still spending billions of dollars a year to boost oil production. It is trying to increase its production capacity from 12 million barrels per day to 13 million barrels per day by 2027. OPEC’s monthly report shows that according to secondary data, Saudi Arabia’s crude oil production increased by 101,000 barrels per day in November to 9.867 million barrels per day.
</p
