Saudi Arabia’s finance minister echoed warnings from the kingdom’s oil officials that a slowdown in fossil-fuel investment globally will cause spikes in energy prices.
“We have very serious concerns that the world could run short of energy if we are not careful in managing the transition,” Mohammed Al-Jadaan said. “In Saudi Arabia, we have an interest in maintaining demand. We are also worried that demand is increasing and there are no alternatives to fill that gap and we don’t want oil prices to go too high.”
Al-Jadaan’s comments, shortly after the government released its 2022 budget, underscore the alarm among some major oil producers that Western governments and energy companies are pulling back from fossil fuels too quickly.
The chief executive officer of state energy firm Saudi Aramco said last week the energy transition was “chaotic” and higher prices could trigger “social unrest.” While companies such as Aramco were making rapid progress developing renewable forms of energy, he said, it would be decades before they could fully take over.
Saudi Energy Minister Abdulaziz bin Salman has argued this year’s surge in natural gas, coal and oil prices demonstrates the need for more spending on their production.
These views differ from what most climate activists say is necessary to slow the warming of the planet. The International Energy Agency, which advises rich countries, has called for the cessation of new investment in fossil fuels if the world is to neutralize carbon emissions by 2050.
Expenditure on oil and gas projects slumped 30% to $309 billion in 2020 and had only recovered slightly this year, according to Riyadh-based think tank the International Energy Forum.
Persian Gulf countries are among the few still spending billions of dollars to increase their output. Saudi Arabia plans to raise its daily crude-production capacity to 13 million barrels from 12 million by 2027.