Saudi Aramco CEO Amin Nasser said Oct. 13 he expects global crude demand to recover to pre-pandemic levels by 2022, provided a coronavirus vaccine is developed by the end of next year .
"The worst is definitely behind us," said Nasser at the Energy Intelligence Forum. "We are seeing a recovery; we are looking at [global oil demand of] 90 million [b/d] currently and it is picking up."
The increasing demand is mainly coming from countries in east Asia, with China close to pre-pandemic levels, apart from jet fuel, he said. The speed of recovery depends on if there is a second wave and how significant it is, he added.
Nasser's outlook is more optimistic than the International Energy Agency, which said in a report released earlier in the day that the oil market's full recovery would not be met until 2023.
The Aramco CEO also warned of a looming supply gap because of dwindling investment throughout the global upstream sector.
"If you look at IEA report, the level of upstream investment this year is 33% lower than last year. If this continues to 2025, 9 million [b/d] of supply will disappear. This will have a significant impact," Nasser said. "There could be a supply crunch in middle to long term if this level of investment is not corrected."
Cash crunch
However, due to the pandemic, Aramco has postponed its immediate plans to develop its LNG sector, Nasser said.
"It is still part of our long-term plan. It was part of our short-term plan but because of what happened we decided to take it to a long-term investment," Nasser said. "Like all oil and gas companies, Aramco has been severely hit by the economic downturn and oil price crash caused by the COVID-19 pandemic."
Nasser stopped short of confirming whether the company has abandoned plans for reaching a final investment decision on a 11 million mt a year US LNG export facility in Port Arthur, Texas. Aramco signed an agreement with US company Sempra for a 25% stake in the project in May 2019, worth several billion dollars, but Sempra said earlier this year that it would delay FID until 2021.
Aramco saw its profits crash by 73% year on year in the second quarter to Riyal 24.62 billion ($6.6 billion) due to the slump in demand and low price environment. Its Q3 results are scheduled to be announced on Nov. 3, the same day as the US presidential election.
Its commitment to paying a $75-billion dividend this year despite its profit squeeze has significantly shrunk the capital it has available to invest in projects.
In December 2019, Aramco executed a local listing on Saudi Arabia's Tadawul exchange, floating a 1.5% stake, proving itself to be the world's most valuable company at the time.
As the company's largest shareholder, the Saudi government will decide whether to follow up with a listing on an international market, Nasser said.
However, he said the company met the regulatory requirements to list on any major stock market, since it also prepared for an international listing when it underwent the initial IPO.
"We looked at New York, London, Tokyo or Hong Kong," Nasser said. "We had to go and make sure we meet the regulatory requirements for any market."
