Oil & Gas

Aramco CEO bullish on Chinese oil demand

October 21, 2024, 11:22 AM

Saudi Aramco CEO Amin Nasser speaks at Singapore International Energy Week

China is Aramco’s biggest buyer
‘Huge growth’ in chemicals demand
100m bpd ‘still required’ by 2050

Saudi Aramco’s CEO is confident that China’s bid to increase growth will have a positive impact on oil demand, especially due to chemicals needed for its energy transition.

Amin Nasser said the world’s second biggest economy needs more chemicals for “the electric vehicles, for solar panels, so that’s huge growth there”.

Speaking on the sidelines of an energy conference in Singapore, Nasser said there will be more demand for jet fuel and naphtha, especially for liquid-to-chemical projects, Reuters reported.

China, the world’s largest crude oil importer and second-largest oil consumer, is Saudi Aramco’s biggest crude buyer, but its demand is forecast to peak around 2027.

Although the country accounted for 70 percent of oil demand growth in 2023, its demand has been slower than expected in 2024. Opec trimmed its growth forecast for China to 580,000 barrels per day (bpd) from 650,000 bpd.

China’s crude imports fell nearly 3 percent from last year to 11 million bpd between January and September 2024.

Oil prices remained flat on Monday morning, following a more than 7 percent drop last week on worries about demand in China. Brent traded at $37.32 a barrel at 10.09am GST.

Opec forecasts that despite China’s slowdown, oil demand will grow in Southeast Asia and the Pacific region, fuelled by expanding economies.

Nasser said that progress in energy transition in Asia is much slower and less equitable than expected, and even with the transition, the Global South is likely to remain dependent on conventional sources of energy.

“If so, more than 100 million barrels per day would realistically still be required by 2050,” he said in a speech at the Singapore International Energy Week conference.

“This is a stark contrast with those predicting that oil will, or must, fall to just 25 million barrels per day by then. Being short 75 million barrels every day would be devastating for energy security and affordability.”

The International Energy Agency forecasts oil demand to expand by just 900,000 bpd this year and close to one million bpd in 2025.

According to Nasser, oil and coal demand are at all-time highs, dealing a “hammer blow” to energy transition plans despite trillions of dollars being invested in global energy transition.

Asia relies on conventional resources for 84 percent of its energy needs. Developing countries may require almost $6 trillion annually to fund the energy transition. Nasser called for them to have a greater say in climate policy-making.

This includes bigger investments in oil and gas and prioritising the reduction of carbon emissions associated with conventional sources by improving energy efficiency and developing carbon capture, utilisation and storage.

He said that rather than displacing demand for conventional energy, countries should choose an energy mix that helps them to meet their “climate ambitions at a speed and manner that is right for them”.