Delivering a keynote address at the King Abdullah Petroleum Studies and Research Center’s Inaugural Energy Dialogue in Riyadh, he called for more sensible, market-driven energy policies and collaborative win-win research and development partnerships to achieve better economic and efficiency returns.
He emphasized the need to balance the twin imperatives of economic and social development on the one hand and environmental stewardship on the other.
“Mistaken assumptions that once dominated the debate have been exposed as unrealistic and impractical and that provides us with a valuable opportunity to reset our collective conversation about energy and to conduct the discussion on a much more realistic basis,” said Al-Falih.
He highlighted four sweeping new realities having transformational effects on the world energy industry, consequently turning the “terms of the global energy dialogue upside down.”
“This energy dialogue comes at an opportune moment: a moment when the global conversation about energy in general, and petroleum in particular, needs to be reset in light of several far-reaching new realities,” he said.
Among the audience were almost 900 delegates representing producer and consumer-nations, think-tanks and research groups.
“I strongly believe that if we are to blaze a path to an optimum energy future, our collective analysis must be more rigorous and our discussion more pragmatic but also more inclusive and progressive than in the past,” he said.
The emergence of abundant hydrocarbon resources including shale gas, the uncertainty in making renewables and other alternative forms of energy viable, the global economic maelstrom prompting a rethink in energy-related investments, and shifts in environmental policy require a more flexible approach able to deal with uncertainties and future challenges, said Al-Falih.
“Today, talk of oil and gas scarcity has disappeared from both the energy press and the general media, to be replaced by news of increasingly plentiful supplies. In addition to abundant conventional petroleum reserves, vast resources of unconventional hydrocarbons have now been targeted for development around the world, and can be produced feasibly and economically,” he said.
To put that into perspective, estimates of unconventional gas in place around the world are in the range of 35 thousand trillion cubic feet, compared to currently proven conventional gas reserves of 64 hundred trillion cubic feet, he added. Last year, as the world consumed nearly 30 billion barrels of oil, global petroleum reserves actually increased by nearly seven billion barrels as companies increasingly turned toward higher risk areas of exploration.
Al-Falih reiterated his concern over “green bubbles” expressed a few years ago regarding the development of renewables and alternative energies has played out in reality with overly optimistic targets by governments and failures of corporates to the detriment of consumers having to pay more for food prices, and capital investments that could have been invested in more pragmatic energy solutions.
Unrealistic assessments over the commercial viability of renewables failed to take into account economic realities.
“That is not to say that we should turn our backs on renewables, rather, the opposite is true. In fact, we are investing them at Saudi Aramco, with a particular emphasis on solar,” said Al-Falih.
“We believe that alternatives can and will make a greater contribution to global energy supplies than they do at present, and we welcome that growth. But the expansion of renewables and alternative energy technologies should be rational and gradual, and tied to their economic, environmental and technical performance.”
The three-day Energy Dialogue, which opened in Riyadh on Sunday, introduced the King Abdullah Petroleum Studies and Research Center’s future-oriented, independent research center and think tank and its work on the development of sustainable energy and environmental policy options to key decision-makers, private investors, academicians, public sector officials and energy thought leaders in Saudi Arabia and the world.
