Countries Invested in Drilling for Oil Unsure About This Not Drilling for Oil Thing

Saudi Energy Minister Abdulaziz bin Salman Al-Saud speaks at a conference in Riyadh on January 27, 2021.
Saudi Energy Minister Abdulaziz bin Salman Al-Saud speaks at a conference in Riyadh on January 27, 2021.
Photo: Fayez Nuraldine/AFP (Getty Images)

Oil-producing heavyweights like Russia and Saudi Arabia will not go quietly into the night. This week, ministers from those and other countries slammed the latest report from the International Energy Agency calling for all new oil and gas development to stop by next year, using some pretty heated (and funny) rhetoric.

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The “euphoria” around the transition to clean energy is “dangerous,” Qatar’s Energy Minister Saad Sherida Al Kaabi said during remarks at the St. Petersburg International Economic Forum in Russia on Thursday. Others, like Russian Deputy Prime Minister Alexander Novak, painted a doomsday scenario of unstable oil markets if the world followed the IEA roadmap. Without investments in new oil and gas exploration, he said, “the price for oil will go to, what, $200? Gas prices will skyrocket.” (The price for a barrel of Brent crude this morning was $71.16–rebounding from negative dollars at the height of the pandemic last year–so that’s a pretty big hypothetical jump.)

Some other countries, like Saudi Arabia, played it a little cooler this week. The country’s energy minister, Prince Abdulaziz bin Salman, called the IEA roadmap “a sequel of [the] La La Land movie” when talking to reporters on Tuesday. “Why should I take it seriously?” he asked. “We (Saudi Arabia) are ... producing oil and gas at low cost and producing renewables. I urge the world to accept this as a reality: that we’re going to be winners of all of these activities.”

Of course, renewables made up a measly .02% of the nation’s energy use in 2017. Saudi Arabia did said this year it will aim to generate 50% of its energy from renewables by 2030 while it keeps producing fossil fuels; the government has a history of making big promises on renewables and then renegotiating goals downwards, all the while continuing to pump out oil.

But other oil majors—or at least, the forces that shape their financial portfolios and legal futures—do seem to be taking the IEA report pretty seriously, as we saw last week after Chevron, Exxon, and Shell all got a beat down from investors and the legal system. Behind the scenes, OPEC seems to know that the IEA’s new recommendations have pretty serious implications for fossil fuels—and is not happy about the implications for potential future investment in oil and gas. In a report released last month in the wake of the IEA’s announcement, OPEC cautioned that the net-zero scenario “may curb demand (growth) for fossil fuels such as oil and gas, as many policymakers and oil and gas companies use the IEA’s scenarios for their strategic planning.”

Regardless of what happens with other oil companies—and, perhaps, even knowing that investors will be less interested in oil in the coming years as states ramp up new policies—petrostates have, for now, stubbornly indicated that they’re just going to keep drilling. Russia is currently constructing a massive oil project in the Arctic, ironically made possible by the fact that climate change has made it easier to explore for oil in the region. Bin Salman told reporters to stay tuned for announcements on more oil and gas expansions. Qatar, meanwhile, is reportedly chugging along with expanding some of its liquefied natural gas facilities in a $29 million investment. It’s clear that the fight to bring down oil production will be massive, global, and can’t just be constrained to companies activists can pressure on Wall Street.

Writing about climate change, renewable energy, and Big Oil/Big Gas/Big Everything for Earther. Formerly of the Center for Public Integrity & Nexus Media News. I'm very tall & have a very short dog.

DISCUSSION

chaos2992
chaos2992

its simple you guys. all that money you invested in drilling for oil, you just take it and use it to build solar and wind farms instead. Saudi Arabia has all that land and sun thy could be making use of. I’m honestly VERY surprised all these places aren’t eager to curb the market on clean energy before there is any competition in that space. it doesn’t matter is gas or oil prices skyrocket, in fact they won’t, because once we make the move properly to clean energy, there will be a minimal number of uses for it. demand will decrease as it has been, supply will drop as a result and an equilibrium can be maintained. there are still going to be SOME uses for oil. we obviously wont all be able to switch to electric cars right away, but we can still phase them out over time. plus if we all had some decent mass transit options we could eliminate that many more cars off the road. power ing our cities though doesnt need to come from oil anymore when we have better options that will last pretty much as long as we will.