Oil industry leaders stress role of fossil fuels in energy transition

Top executives of Exxon Mobil Corp. (NYSE:XOM) and Saudi Aramco (TADAWUL:2222) (ARMCO) voiced their backing for the global transition to cleaner energy forms, while emphasizing the lasting significance of oil in the energy sector for the foreseeable future. The statements were made on Monday at the World Petroleum Congress held in Calgary.

Exxon CEO Darren Woods and Saudi Aramco's Amin Nasser expressed skepticism over recent predictions by the head of the International Energy Agency, which suggested that fossil fuel demand would peak by 2030. Both leaders stressed the necessity of continued investment in conventional oil and gas as part of a balanced approach to combating climate change.

"There seems to be wishful thinking that we're going to flip a switch from where we're at today to where it will be tomorrow," Woods said on Monday, warning against a hasty reduction in oil usage due to increasing global energy demand. He stressed that without sustained investment in the industry, supply shortages could lead to inflated prices.

Nasser echoed Woods' sentiments, predicting record oil usage of 103 million to 104 million barrels per day in the latter half of this year, with demand expected to rise to 110 million by 2030. He emphasized that this puts pressure on the industry to continue exploring new production sources rather than reducing output as environmental advocates suggest.

"We need to invest," Nasser said during the conference, "otherwise in the mid to long term, we will have another crisis and we will go backwards in terms of using more and more coal and other cheap products available today."

Woods also highlighted the importance of clear government policies focused on emission reductions. He mentioned that while initiatives such as the U.S. Inflation Reduction Act are stimulating investments in energy transition supply chains, more efforts are needed.

"Governments cannot afford to subsidize reduced emissions in perpetuity," Woods told the World Petroleum Congress. "Ultimately, market forces are going to have to come into play, and we're going to need a market for carbon reduction."

The industry's stance on climate change and carbon emissions has evolved, with a common approach emerging: acknowledging the reality of climate change and the need for emission reductions, while asserting that oil continues to be vital in meeting global energy demand. The sector also believes it can contribute significantly to reducing pollution through engineering solutions such as carbon capture and storage.

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