Alhamdulillah, Rahman, Rahim.
Good morning, Your Excellencies, Distinguished Guests, Ladies and Gentlemen, and The Right Honorable Dato' Seri Anwar Ibrahim, Prime Minister of Malaysia.
Being in Kuala Lumpur is enjoyable, especially on the eve of Eid al-Adha. The Prime Minister's ability to attend today's meeting is a huge honor for us.
I also want to express my gratitude to Tan Sri Tengku Muhammad Taufik and his staff for hosting us so kindly and for planning this important meeting.
Let me first briefly discuss the current state of the energy market, which has been made more difficult by the situation in Ukraine. Overall, we think that the fundamentals of the oil market will continue to be solid for the rest of the year.
Despite the potential for recession in a number of OECD nations, the economies of developing nations, particularly China and India, are supporting a solid increase in oil consumption of more than 2 million barrels per day this year.
By historical standards, this is high. Additionally, despite some economic challenges, the petrochemical and transportation sectors in China are still exhibiting signs of demand growth.
So, we have high hopes for the market's future over the rest of the year. Additionally, supply-demand balances are projected to tighten further as the global economy as a whole begins to recover.
But the future of Asia's energy is the main topic of my remarks this morning. How the discussion of the global energy transition could better reflect the objectives of Asia. Aramco's and Asia's perspectives on the future of energy are similar.
Let us start with Asia's expanding economic power. By 2050, the region will have contributed half of the global GDP, up from its current 46 percent share.
In contrast, the EU's stake is only 15% and North America's portion is less than 20%.
With a GDP per capita that has increased from just one thousand dollars in 1980 to over eighteen thousand dollars now, people in Asia are also getting better off. Additionally, three of the top five economies in the world are predicted to be Asian by 2050, with emerging market growth rates anticipated to be twice as strong as developed market growth rates.
These changes are seismic.
However, I do not think the popular energy transition narrative and the existing transition policies effectively reflect the interests of this dynamic region when it comes to the energy transition.
Correctly attempting to handle environmental sustainability are current transition policies. The equally important problems of energy affordability and security, though, are not given enough attention.
Experience has also taught us that energy transitions are a difficult, multi-generational process. It is improbable to completely restructure a $100 trillion global economy in under 25 years.
And because not all countries have reached the same economic maturity level, applying the same energy transition policies to everyone will have a negative impact on their ability to compete.
All of this is pertinent to Asia as a whole. Additionally, the less developed regions of Asia suffer exceptionally difficult conditions.
For instance, 2 billion people in the region, or about half of the population, lack access to clean cooking fuels, which is bad for their health and the environment. Additionally, 350 million people only have limited access to electricity, 150 million people do not have any access at all, and almost a billion people frequently endure power outages.
The picture is therefore quite varied. Many people in various Asian countries still depend on basic electricity availability to help them escape poverty.
Asia requires increasing amounts of tested energy to maintain its expanding middle class, meanwhile, as the region is a rising economic powerhouse with a growing population. And present transitional policies are seriously endangering that route to success.
The situation is far from ideal, even at the very tip of the changeover spear.
For instance, despite the welcome addition of solar, wind, and electric cars during the past ten years, their growth has not even kept pace with the rise in the world's energy demand.
Additionally, green hydrogen still has an energy equivalent cost of between $200 and $400 per barrel, which is higher than the current price of oil, which is around $75. As a result, demand for conventional energy sources like oil and gas has increased while coal continues to be the primary source of electricity worldwide.
There has already been underinvestment in oil and gas for ten years due to the dominant narrative and current transition policies. It is hardly shocking that people experience an energy crisis after shocks like the turmoil in Ukraine.
Additionally, if you put all of your transitional eggs in the new energy basket, you will be in a scramble when it is unable to support the weight!
The only bright spot is the rising understanding that global transition strategies need to be more practical, organized, and inclusive in order to handle issues like energy security and cost as well as environmental sustainability.
That ought to encourage various energy sources to operate concurrently while scaling up alternatives to do more. with increased international efforts to further reduce the carbon footprint of conventional energy, driven by our industry.
This also applies to the potent tool of efficiency improvement. A multi-speed transition model's acceptance would also be beneficial for Asia. And adequate financial aid to assist developing nations in transforming their energy systems and coping with climate change.
Thankfully, support for this shift of direction is beginning to grow.
China and Japan, two major energy consumers in Asia, have previously emphasized the need for realistic and inspiring transition plans. And before lessening reliance on the old energy, that new energy must be ready.
Others emphasize that as there are varying economic and energy situations around the world, the road to carbon neutrality should be as well. However, a lot more work needs to be done before this practical strategy can be applied globally.
I believe this is Asia's best chance to express its own transition priorities louder and more clearly. The voice of Asia's change must coincide with its economic voice.
We are putting this practical approach into practice at Aramco.
As an illustration, we are continuing our upstream investments to address the alarming worldwide underinvestment in oil and gas. Additionally, we are working harder to lower our relatively modest upstream carbon intensity.
Additionally, we are engaged in numerous technical initiatives with the goal of lowering GHG emissions from conventional energy, including Direct Air Capture, Circular Carbon Economy, and CCS.
Together, this means that the oil we provide may aid Asian nations more and more in achieving their emission reduction targets. In the meantime, we're speeding up the growth of our downstream and chemicals businesses.
In addition, we are expanding our line-up of energy goods to include e-fuels, hydrogen, ammonia, and methanol. And when it comes to the world's net-zero objectives, our ideas go beyond a simple energy transition.
They also understand the necessity for a change in the materials used to build modern society, including non-combustible applications of oil and gas in more sustainable materials.
Importantly, we are stepping up our ground-level efforts to become Asia's preferred energy supplier.
We recently started working with S-Oil in Korea on a seven billion dollar petrochemical project. In a similar vein, we just finalized contracts for two multi-billion dollar investments in liquids and chemicals in China. Additionally, the confidence we have in Malaysia and the larger ASEAN region is demonstrated by our PrefChem joint venture with Petronas in Johor.
Partnerships are the unifying factor—with individuals we know well, organizations we can trust, and areas we respect. We are doubling down on these needs by being Asia's "one-stop source," which also aims to balance energy security and affordability with environmental sustainability, in order to meet Asia's growing demand for energy, chemicals, advanced materials, lubricants, and new lower carbon energy.
Additionally, we are stepping up our efforts to promote investment prospects for Asian businesses in Saudi Arabia with the greatest capital expenditure program in our history.
We, like many Asians, perceive the future in decades rather than quarters, in eras rather than cycles, ladies and gentlemen.
We understand that Asia will be our future in an Asian century. We can provide the energy future that Asia's economy and people deserve if we can pool our resources to support a novel strategy for the energy transition that takes into account the region's particular needs.
Eid Mubarak and Selamat Hari Raya Haji, please!