Global oil, gas demand will sustain for decades, says Saudi Aramco top executive

A longstanding crude oil supplier to India, Saudi Arabia’s state-run oil producer Saudi Aramco has been scouting for investment opportunities in India’s downstream segment. Though its attempt to buy 20% stake in Reliance Industries’ oil-to-chemicals business for $15 billion fell through and the Ratnagiri refinery in Maharashtra is still in the works, Fahad Al Dhubaib, Saudi Aramco’s senior vice president of strategy and market analysis tells Kalpana Pathak that India will be a key market and the world will continue to use oil and gas for decades to come. Edited excerpts:

What is Aramco’s India business strategy?

India has significant potential given its population, industrialisation plans, and the modernisation that has been happening over the past two decades. We believe that most of the energy demand will be coming from the Global South, and India is one of the big contributors to that growth.We also see 2 billion people adding to the global population, predominantly from the Global South between now and 2050. Around 1 billion people entering the sweet spot of energy growth, which is around $10,000 GDP per capita. So, many variables to growth in not only energy demand but also materials and petrochemicals.We are looking at investments in refining hydrocarbons, essential chemicals and materials. This makes Aramco well-placed to provide both the energy and essential petrochemicals required to help India become a global manufacturing hub and deliver on the “Make in India” vision. Aramco is also interested in collaborating with India in areas including energy storage, digitisation, and renewables.

You are a major LPG supplier to India. How do you see the demand for LPG?

India is one of the biggest markets. We believe that clean cooking has the duality of reducing emissions, especially when families are using biomass or wood. At the same time, this helps improve their well-being and health. The World Health Organization (WHO) says that around 4 million people die every year from indoor pollution and a big part of it is indoor cooking. We see India as a growth market for LPG, which will also significantly reduce emissions.

For your downstream investments, you were looking at investing in Reliance Industries’ O2C business and partnering in the mega Ratnagiri refinery. Both did not happen. How long is the waiting period for Aramco?We are a company that thinks in decades and not in quarters, and we are continuously looking for the right opportunities. And as I said, India is central to our focus as far as growth.Any update on the Ratnagiri refinery?

We have always had relationships with the Indian energy companies, but any details on ongoing discussions will be made available at the right time.

How do you see your legacy business versus the renewables push?

The world will continue to use oil and gas for many decades to come. Demand for energy and petrochemicals will continue to increase over the long term. As a low-cost oil and gas producer with one of the lowest upstream carbon intensities among major producers in our industry, we have a critical role to play in meeting the world’s demand for secure, reliable, and affordable energy.At the same time, other parts of our business, such as new energies, are growing fast from a lower base. The pace of that growth will depend on the speed of technological innovation and the ability to lower renewable energy costs to make the economics more viable for consumers around the world. We believe that consumers will demand affordable products.Moving too soon in the new energies space could be costlier to consumers. Without the right incentives from governments, an area like hydrogen will take a while before it takes off. If you look at the cost of hydrogen per barrel of oil equivalent, for blue hydrogen, it’s around $250, for green hydrogen, it is around $400 a barrel. These are expensive products compared to oil and gas.

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