The oil market is not paying attention to the fact that the global idle capacity to increase oil production is very low, the CEO of Saudi Aramco said on Tuesday (4), with the CEO of Shell adding that the investments do not will change because prices are high.
“[O mercado está] focusing on what will happen to demand if the recession hits in different parts of the world, they are not focusing on supply fundamentals,” said Aramco CEO Amin Nasser at the Energy Intelligence Forum in London.
Estimating idle capacity at 1.5% of global demand, he added that providing a backlog of idle capacity, which will be used as China’s economy opens up from the coronavirus restrictions, was not just Saudi Aramco’s responsibility.
Speaking at the same event, Ben van Beurden, CEO of Shell, said current high prices do not easily translate into a shift in capital allocation, as it can take decades for oil and gas projects to start producing and remunerate
“You can’t have a quick response to the market signals we’re seeing today,” van Beurden said, adding that Shell’s overall strategy continues to move away from oil and gas products.
“We cannot live in this world without idle capacity.”
If he had $1 billion left over to spend, he would invest in the “energy system of the future,” said van Beurden, who will leave Shell next year.