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Thu 28 Feb 2008 04:04 PM

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Aramco’s $90 billion five-year plan

World's largest energy company CEO calls for clarity in energy vision.

"The world simply cannot afford to leave massive quantities of oil, gas and coal in the ground and move precipitously to unproven alternatives while still hoping to satisfy future growth in global energy demand."

That message was delivered Saudi Aramco president and CEO Abdallah Jum‘ah during his recent keynote address in Houston. Saudi Aramco is the world's largest oil company by production and reserves and manages 102 oil and gas fields in Saudi Arabia (as of mid-year 2007).

The company has proven crude oil reserves of around 259.9 billion barrels of oil, and delivers an average daily crude oil production of 8.9 million barrels per day (2006). In 2006 the company's crude oil exports stood at 2,541,692,569 barrels.

"I am deeply concerned that if the prevailing confusion involving energy issues continues and key players scatter in different directions, there is considerable risk that the necessary expansion of energy supplies would be significantly compromised," said Jum‘ah.

If the industry is going to invest in and develop the right technologies, expand oil and gas supplies, and continue to provide a reliable supply of energy to the world, it will need the proper enabling environment, he said. That includes economic, technological, geopolitical, regulatory, policy and environmental dimensions.

"We also need the whole world to arrive at greater clarity as to what it wants and realistically can achieve in terms of a future energy mix; to achieve a greater consensus among producers and consumers about the roles and responsibilities of each in terms of realizing that mix; and finally, to enhance the security of both supply and of demand over the long term," said Jum‘ah.

"With time, we will need to draw upon a variety of energy sources, including alternatives, to help meet demand," he said, pointing out that expert forecasts indicate fossil fuels will continue to dominate global energy supplies for the foreseeable future. In fact, the share of fossil fuels is predicted to remain above 80% through the year 2030.

Regardless of this data, "A number of well-intentioned strategies call for a much more aggressive displacement of fossil fuels, despite major technological, economic infrastructure and public acceptance hurdles remaining in the way of achieving targets," Jum‘ah said. "That has led to considerable confusion over what is realistic when it comes to alternatives, and what the future call on alternatives and conventional sources will actually be. Such uncertainty clearly has negative implications for the vast investments required to expand supplies of fossil fuels."

Jum‘ah pointed out that, "If conventional and nonconventional oil resources fall victim to well-intentioned but ultimately flawed or confusing energy policies, then the necessary investment of time, toil and treasure may not materialize, and a significant proportion of these precious resources might not be recovered."

To help meet the world's growing appetite for energy while protecting the environment Jum‘ah said greater clarity and dialogue would be crucial. "The world community needs to reach a consensus on this issue and clearly articulate a future path so that we can work together."

To accomplish that goal, he recommended a four-step program: First, agree that we should continue to develop fossil energy resources while making their use cleaner and more efficient. Second, craft a consensus on energy strategies that devote sufficient attention to the rational development of alternatives so that their use can be increased at a realistic pace. Third, enhance the efficiency of energy use and conservation to the greatest extent possible. And fourth, emphasize a range of both natural and technological solutions to carbon sequestration based on their economics and practicality.

"I strongly believe that there is vast unrealised potential when it comes to applying futuristic technological solutions to carbon sequestration, and the world may have just scratched the surface on this issue."

Jum‘ah also said Saudi Aramco was planning an investment of $90 billion over the next five years to help strengthen energy security amid growing global demand.

The speech concluded with Jum‘ah expressing confidence that, "By adopting a more rational approach to energy issues and the myriad factors that shape them, and promoting a spirit of partnership and shared endeavor among various stakeholders, the world can and will overcome the energy, environmental and economic challenges that lie ahead."

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