The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future

[M073-02] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:00:24 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

Thank you, Vijay, and I am very grateful to the economist for giving me, ecosystem here, the chance and opportunity to speak about what we are intending to do.

[M073-04] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:00:59 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

Well, the important takeaway is that we have elected to be reposition ourselves when it comes to this issue along with the, even more overriding issue, which is how we would like to refit ourselves as no longer an oil and gas producer, but a competitive energy producer. We have the wherewithals, we have the experience and we have the evidence to showcase that we can compete and compete in a very aggressive way as being the most prominent energy producer when it comes to efficiency, effectiveness and cost-effectiveness. We opened our spectrum to focus on 3 pillars. I keep repeating them and I would like to get everybody to try to think about it when it comes to energy, I think we have to KPI ourselves, the whole world needs to KPI itself into 3 KPIs.

[M073-05] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:02:04 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

One: never lose sight of energy security because it is profoundly, extremely fundamental, never lose sight of economic prosperity, economic diversity, and the well-being of the individual countries economies and the global economy, taking into account the differences of how developed these countries are, and how much people need to work, those who are rate cameras such as us. How much time, efforts and money and resources need to be dedicated to diversify their economies, and the 3rd profound pillar is we should do all of the above while attending to the concern of climate change, and we have to do all of the above with mitigating the concern of climate change. Obviously, and I would insist on emphasizing the point that none of the 3 should be done by compromising the others. We have to give them all equal footage and footing and ensure ourselves that we must not lose the sight of delivering on the 3 of them.

[M073-07] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:04:25 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

Well, it was an eye-opener for the new cadets, you know, keep in mind that this organization is a new organization. The reform that we went through over the last 2 years and enabled us to bring in new thinking, new approaches and to wake up to some realities that I must emphasize that they were not considered or something had shadowed it totally, which is how we have looked again at our energy mix and we saw a great deal of embarrassing to be honest deficiencies and embarrassing abuse of resources.

[M073-08] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:05:08 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

So that is why we have to go and re-configure our energy mix towards where we have all our utilities will be converted into gas and renewable 50:50 because where is, we have been wastefully wasting a million barrel of crude burning and fuel burning at domesticated prices while the opportunity there was to export it. I cannot think of a country on Planet Earth that would be so much incentivized as a government, as a state to go for that version of that energy mix more than us, so that is why we are precipitously on moving forward with that direction.

[M073-10] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:06:13 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

We will be bringing more shale gas, which is a field down in the south east part of the country, which is the shale gas, it is our main big experience with shale gas, but the resource base is so huge and funny and funny enough, it has other additional properties, which is that it is full of liquid gases like ethane, for example, or NGLs and the NG, and there you could actually improve the economics of that shale gas by taking these liquids and converting it into chemicals or even exporting it, but mostly it will be more chemicals. That shale field will, shale gas will deliver us with the additional resources that we have in getting the 50% conversion to take away all these liquid, crude oil and fuel oil out, and more important also, that field will partially be dedicated to create that blue hydrogen.

[M073-11] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:07:20 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

The other 50% is the renewable. We have a record today, registered record, being the cheapest kilowatt hour of renewable and also both solar and wind, we honestly believe that positioned as such would also enable us, and we have a big history of understanding desalination where even our desalination plants, we are taking them away from liquids or gas, and we are using RO. That RO technology, it was refined even more with our own people that are working on desalination, so we actually, we will be cutting cost by about 30% when they start using electricity direct instead of burning themselves.

[M073-12] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:08:15 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

And in doing so, just to encapsulate it, this is how we managed two years, you know, let us not forget that Saudi Arabia had issued its last NDC in 2019, where we had committed to 130 million tons, the new NDC, which we issued just Saturday, we are reaching in 2030 280 million, approximately 280 million tons, it is more than doubling what we could do. I can tell you quite candidly there is no country on planet Earth that would do this while actually earning money and diversifying its economy than us because we will have more petrochemicals, we will have saved million barrels that got to be burned, and it will be a facilitator for us to produce more blue hydrogen. That is why we are testing with the Green Hydrogen NEOM because we should, you know.

[M073-14] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:09:35 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

Yes, and I think I have the right to post because it is the biggest project on Planet Earth when it comes to testing green hydrogen, it is factually, it is really putting our money where our mouths are, and I stand to be corrected on who else is adventuring with green hydrogen as we are, and that is why people are taking it serious, that is why we have signed with the German Joint Collaboration Agreement, would be soon with the French and I think the UK got interested. More important, we are advocating now something different because we have learned from others' people experience, for example on LNG, how LNG was developed in the 70s, 80s and 90s. People walked into LNG from one end to the other end, from the upstream all the way to consumer.

[M073-15] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:10:38 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

So one of our prerequisites now is that we need to size the market of both green and blue. Sizing the market would take a huge effort by all parties. Those who are potentially would be producers, and those who would be potentially consumers. When you size up the market and the size of that market get to be big, you will create an immediate incentive for people to invest in developing technologies and deploying technologies. There are fundamental issues when it comes to both blue and green hydrogen, where they have still some impediments and shortcomings when it comes to technologies and cost factors to be reduced. Bringing parties together to work together on these challenging issues is fundamental. The size of the market will be the incentivizer.

[M073-17] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:11:45 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

In all what we will be doing the energy mix cost as a government budgetary cost would not be more than 1.3 billion dollars over the whole period. All of that energy mix transformation will happen through investments. Renewable, we run tenders as everybody, and we have a principal buyer, he will buy that electricity from these private outlets. The convergence will happen with the, as you have seen with regard to hydrogen, it is all private sector, it will not be government, may be in the pipelines on the gas, we are also investing as a government, so we will be allowing Aramco to build and operate those gas pipelines that would help us to get 50%, but it would be owned by the government and in one day or another, we will find this, you know, bringing all of these companies to lease it for them.

[M073-19] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:12:56 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

But it will be done on an investment basis as opposed to, you know, government contract and construction and all of that.

[M073-21] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:13:42 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

Well, even before, permit me to call it the name I like to call it even before the La La Scenario of the IEA. April 2020 in the midst of the huge part of the crisis, we made an announcement that we were going for Aramco itself, we will be moving from 12 million capacity to 13 million, that tells you a lot about that we do think way beyond the tip of our noses. We know that there will be demand for Saudi oil. Now, everything could be said about what would be the future demand and what would, but we have to be also mindful of what would be the future supply, as you have rightly said we remain to be the least cost producer, and we see demand for oil coming either from lack of supply from others or the maintenance of demand. If you look at the trajectories of those including the IEA, but you will see the jury is still way out on how the perception of demand, but also the jury is still out on how people receive supply.

[M073-22] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:14:57 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

Now, we are talking about the situation in existence today. The economist did a good job last week, explaining the notion that, you cannot jump start the future. You have to work on today's and tomorrow in the next 2, 3, 4 decades. That is why we have made that commitment, you know, our own net zero 2060 because we are just mindful of how the technologies would develop. Mind you, and I have to, and I know that we run out of time, but it is very crucial when we got into signed up to the Paris Agreement, there was in the NDC, there was an agreement that we will have like, you know, a flexible or dynamic baseline because that basic dynamic baseline was helpful, because if growth of the energy market does not happen, and our diversity does not happen, economic diversity does not happen, we will have to consume most of these hydrocarbons domestically.

[M073-23] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:16:05 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

And therefore our emission will be higher. If that happens, that dynamic scenario would say, we will be reducing from a higher base, and the alternative also happens, and that is why we say we are aiming for 2060, but what we are hoping for, and because the IPCC said that most of these carbon sequesterization, carbon capture and all of the above may not mature before 2040, but if they do mature before 2040, we will have within the so-called dynamic baseline that we are working with. We said we are aiming for 2060, which means depending on what happen, we could bring that date earlier, and I hope much earlier, and we could, it could be also for all sorts of unforeseen circumstances. We may have to go beyond the 2060, but it is all relevant to economic diversification, to economic well-being, and to the evolution of technology.

[M073-24] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:17:18 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

Find me any country that committed to any date 2050 or 2060 that would not have tagged it with the conditionality, which would come, you know, funding, financing or lending. None of that, we are seeking zero. What we are seeking is a collaboration in bringing technologies to mitigate emission. What we would love to have very simple, the whole world need to focus on emission reduction of all greenhouse gases at all sectors, and we should all involve ourselves in that mitigation effort. If we can get everybody to agree to that without disturbing the economies, the various economies and their ability, some economies to be forthcoming, you will become more inclusive.

[M073-25] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:18:17 · The Economist Interview with HRH Energy Minister: Energy pathways Towards a low carbon future · 2021-11-02 · مشاهدة عند هذا التوقيت

And if you become more inclusive, the recipe for that is not to be too facetious about what energy source you want to use. Let people use what energy they have and can produce indigenously. However, focus on the mitigation of emissions of all engines. That is why we announced on Saturday that we will be lining up with that Methane Initiative because actually funny enough, we will be using our history and what we have achieved, as a role model for others to follow, including the US by the way, and we compete with Norway, who has the lowest methane emission in our facilities.