Witnessing the Russian-Ukraine war and its consequences on oil demand, fear of recession, and an economic downfall has been a major concern for the world – not only within the oil and gas industry.
As economies are trying to recover post-pandemic – another wave of the coronavirus is threatening the world and industry, with potential lockdowns.
Saudi Arabia does not foresee an oil shortage any time soon, yet it has emphasised the necessity to invest more in refining capacity in order to process and produce more crude – which is considered a concern to many OPEC+ countries.
Oil prices globally increased after the invasion of Ukraine by Russia. When it comes to the kingdom’s stance, the Russian-Saudi ties are integral to the kingdom’s strategy, especially as Russia is a major producer and a prominent member of OPEC+.
Saudi Foreign Minister HRH Prince Faisal bin Farhan Al Saud said that without cooperation in OPEC+ as a collective, it would be impossible to properly ensure adequate supplies of oil to international markets. Additionally, the kingdom has been importing Russian fuel oil for many years. Recently, it has more than doubled its Russian fuel oil import in Q2, 2022 – where it reached to 320,000 barrels per day in June.
Uncertainty in the oil and gas sector
Aside from the strong ties, and the high oil prices – Saudi Arabia’s economic surplus of $15.3 bn in Q1 2022 will aid in any economic downfall – if the kingdom faces any.
Energy transition, and renewable energy will always be guiding the industry from this point onward – including the hydrogen value chain, carbon capture, energy efficiency, and a move towards sustainability – as more companies champion efforts, initiatives, and investments locally, and globally.
We can see that with Saudi Arabia’s ACWA Power – one of the leading Saudi developers, investors, and operators of power generation, and a major supplier in the NEOM green hydrogen project. The company has recently invested in South Korea’s POSCO Group to develop green ammonia and green hydrogen project in South Korea.
NEOM’s ENOWA is also investing in green hydrogen – as it aims to be the world’s supplier of hydrogen – with its recent collaboration with Extreme E’s international off-road racing series – to power their racing vehicles with renewable energy – promoting sustainability.
We have also done an exclusive with the asset optimisation software company, AspenTech, on the future of renewable energy in the MENA region, and Saudi Arabia specifically. The kingdom has a high potential of pursuing further renewable energy investments within green and blue hydrogen, solar, and most importantly carbon capture utilisation and storage. Leaders in the industry such as Saudi Aramco, NEOM, and ACWA Power will enable this shift – due to their expertise in the industry.
With the U.S.-Arab summit taking place recently in Jeddah, President Joe Biden’s visit to the kingdom has aided in strengthening the countries’ ties, with the signing of multiple agreements – including a clean energy partnership between both countries.
Its framework involves the implementation of the circular carbon economy, the realization of the Paris Agreement goals, carbon capture, utilisation and storage technologies, and direct air capture.
Oil Giant, Saudi Aramco has expanded its Namaat industrial programme, and added 55 additional investments to support industrial investment partnerships, create jobs for Saudis, and contributes towards national growth and capacity building. The investments include joint ventures, and agreements with Honeywell, Samsung Engineering & Al-Rushaid Group, and Hyundai & Al-Rashid Trading & Contracting Co. This move will not only help improve the company’s performance, it will also boost local and international companies – especially during uncertain times in the oil and gas field.
The kingdom, as always, is pioneering the industry, overcoming challenges, and proceeding forward with further sustainable growth, locally and internationally.
