Global oil demand ‘very healthy’, will reach close to 99 million b/d by year-end

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(S&P Global) Global oil demand is “very healthy” and will reach close to 99 million b/d by the end of this year from 97 million b/d in Q3, with some natural gas customers switching to liquids, Saudi Aramco CEO Amin Nasser said Oct. 4.

“There is higher demand that we are seeing,” Nasser told the Energy Intelligence Forum.

He added that some of the reasons are short term, such as high electricity costs in the UK and Europe in general and a shortage of natural gas, estimating the switch from gas to oil at some 500,000 b/d.

“Overall, the demand is very healthy,” he said.

Supplies are also falling as some companies have moved away from oil and gas due to constrained funding, he said.

“I’m concerned that this trend will continue for the foreseeable future. But the bigger issue is they are related to the energy transition,” he said.

While the industry supports the transition to cleaner sources of energy and “pragmatic” energy policies, “hasty decisions must be avoided as much as possible in order to get back to normality in the business,” he said. “The lack of investment will have more impact on prices if we do not have the right resources developed.”

Aramco is taking steps to increase its maximum sustained capacity from 12 million b/d to 13 million b/d by 2027, from both existing fields and new fields, especially offshore, he noted. The project is currently in the front-end engineering phase, he said.

“We are doing our share in terms of building, even though we have adequate spare capacity today, we are bringing additional supplies to the market while we are working on reducing our emissions at the same time. But other energy companies need to do the same,” he said.

Aramco’s efforts to reduce emissions include carbon capture, converting C02 into other products, reducing carbon intensity, renewables and hydrogen, though the issue of hydrogen affordability “needs to be overcome,” he said. Both conventional and non-conventional energy sources need to be explored rather than not doing any investment on conventional sources, he said.

One of Aramco’s unconventional projects is Jafurah, currently in the development phase, which contains large quantities of liquid rich gas and is expected to come onstream in 2025, he said. Output is seen at 2 Bcf/d by 2030 from some 200 MMcf/d or 300 MMcf/d in the first phase. Outside investors may be brought into the gas business, along with midstream and downstream lines, he added.

On the downstream side, Aramco’s plan to buy a stake in India’s Reliance Industries is “back on track” after COVID-19 delays, he said.

The company’s Aramco Trading Co. is expected to reach 8 million b/d of trading in five years, from almost 5.5 million b/d currently, he added. LNG is a new market that is being traded, he added.

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