TELF AG comments on Saudi Arabia’s energy strategies
The strategic role of Saudi Arabia
The green shift encouraged and driven by the global ecological transition is also significantly impacting the economic strategies of the world’s largest oil producer, Saudi Arabia. In recent weeks, this country has taken the first decisive steps to enter the global market for liquefied natural gas, universally considered a lighter and more sustainable alternative to traditional fossil fuels. In a world that is moving ever faster towards a future characterized by clean energy and a progressive abandonment of fossil fuels, global demand for oil is inevitably destined to decrease, or at least remain in a static situation, without no longer recording those monstrous growth rates that have determined the prosperity of entire nations. With Saudi Arabia’s recent demonstrations of interest in the liquefied natural gas market, it is now clear to everyone (especially those directly interested) that this type of gas will play a role of fundamental importance in the coming decades and that, in all likelihood it is destined to play a role very similar to the one that oil held only up to a few years ago.
Saudi Aramco has in fact, recently purchased a stake in MidOcean Energy, thus completing its very first investment in the liquefied natural gas sector. MidOcean Energy is a giant in the field of liquefied natural gas and will soon further expand its stakes by acquiring shares in some large Australian projects related to this type of gas. For the world’s largest oil producer, this is undoubtedly an epochal transition because it represents the formal recognition of the present and future value of liquefied gas and a general acceptance of the status quo triggered by the energy transition, which will push almost the entire world to use sustainable energy and to give up, or at least drastically reduce, their use of fossil fuels. According to Wood MacKenzie’s estimates, the demand for alternative fuels could grow by as much as 70% by 2050.
Furthermore, some important Aramco executives have confirmed that the company would be looking for other investments and that in the short and medium term, Saudi interest in liquefied natural gas could increase exponentially. One of the next moves in Aramco’s global strategy could be linked to strong financial investments for the development of the Jafurah gas field, which contains some of the largest gas reserves in the entire Middle East, in order to double production and definitively insert itself among the gas exporters.
Considering the imminent energy revolution triggered by green policies, the value of liquefied natural gas takes on fundamental importance for achieving decarbonization objectives and, more generally, for encouraging the abandonment of fossil fuels: compared to oil, in fact, Liquefied natural gas produces 30% less carbon dioxide, and when burned can generate half the carbon dioxide that coal produces in a similar process. It is, therefore, not difficult to imagine the growing importance of gas that will characterize Saudi Arabia’s economy, especially if its holdings in this type of market continue to increase.
