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According to Aramco Ceo, taxing oil firms won’t address the world’s energy issue.

RIYADH: Amin Nasser, Saudi Aramco Ceo, emphasised the need for more investment in the energy industry and warned that taxing oil firms and regulating energy prices are not long-term answers to the world’s energy dilemma.

In order to address an energy crisis that is pushing up inflation, causing companies to halt output, and raising prices ahead of winter, governments around Europe have invested hundreds of billions of euros in tax cuts, giveaways, and subsidies.

Plans unveiled by the EU last week would extract surplus profits from energy corporations and redistribute them to lower consumer costs.

Aramco Ceo

Nasser, who is in charge of the biggest oil exporter in the world, claimed that one of the main causes of the issue was the hydrocarbons sector’s persistent underinvestment at a time when viable alternatives to fossil fuels were still hard to come by.

At a seminar in Switzerland, Nasser said, “Freezing or capping energy costs could benefit consumers in the short term, but it does not address the root issues and is not the long-term solution.”

And it is obvious that taxing businesses when you want them to expand output is ineffective.

“Even if the Ukraine conflict ends today, the energy issue will not stop,” he continued. Underfunding of the oil and gas industries is the main source of energy instability.

By 2027, Saudi Arabia’s oil production capacity is expected to increase to 13 million barrels per day thanks to investments made by Aramco, but Nasser cautioned that global investments in hydrocarbons were still “too little, too late, and too short term.”

The lack of investment occurs at a time when there is little available capacity and, despite significant economic headwinds, demand is “pretty solid.”

Amin Nasser stated: “That is why I am extremely concerned.” He said, “When the global economy improves, we may anticipate demand to rise higher, destroying the little spare oil production capacity out there.”

However, Nasser pointed out that limiting energy costs may benefit customers in the near future.

He further stated that the current economic crisis should not trigger changes to the global climate targets.

The use of alternative energy sources and technology should not be discounted just because conventional ones are being invested in. However, he asserted that the world deserved a far better solution to this catastrophe.

We are aiming to reduce our upstream carbon intensity, gas flaring, and methane intensity, which are already among the lowest in the world, Nasser continued.

As the epidemic made the industry’s lack of investment more obvious, a research published last month by the King Abdullah Petroleum Studies and Research Center found that a significant increase in spending is required in the oil sector beginning in 2025 in order to ensure energy security.

The KAPSARC research states that the investment forecasts for 2022 are pessimistic.

According to the analysis, global oil and gas investments, which include both midstream and downstream investments, will rise by just $26 billion this year, a significant decrease from the $140 billion increase in upstream capital expenditures required by 2025.

According to the survey, one of the main reasons why investors avoid the oil business is due to “misconceptions” about climate change.

According to KAPSARC in the paper, “the oil and gas industry has suffered from external discreditation through climatic and societal fallacies, establishing stigmas that have impacted its investment appeal.”

According to the research, pricing volatility, uncertainty resulting from sharply differing long-term estimates, growing worries about climate change, and a lack of environmental, social, and governance legislation are the four main issues affecting investments in the industry.

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