(MENAFN- Khaleej Times) Oil giant Saudi Aramco launched a $1.5 billion fund to support an inclusive global energy transition on Wednesday while Saudi officials said the switch from hydrocarbons could take decades, necessitating continued investment in conventional resources.
Saudi Arabia, the world's top oil exporter, and fellow Opec producers have warned of underinvestment in fossil fuels especially while spare production capacity is thin and demand relatively healthy despite economic headwinds.
'The current transition plan is flawed honestly. It is not really delivering. What we need is an optimal, realistic transition plan,' Aramco CEO Amin Nasser told a business forum, where he announced the new fund managed by Aramco Ventures. 'We need to realise that today alternatives are not ready to shoulder a heavy load of the growing energy demand and therefore we need to work in parallel until alternatives are ready.'
The Aramco sustainability fund would target investments globally, with initial focus on areas including carbon capture and storage, greenhouse gas emissions, as well as hydrogen, ammonia and synthetic fuels.
Saudi Arabia and fellow Gulf Arab states have sought to bolster their green credentials. Riyadh last year said the kingdom aims to reach net zero emissions of greenhouse gases, mostly produced by burning fossil fuels, by 2060.
Realistic timeframe Saudi Finance Minister Mohammed al-Jadaan told the FII gathering that thinking around the global energy transition has 'now became more realistic that actually transition will take... possibly 30 years', and that conventional resources remained important to ensure security of supply.
While the global economy faces a 'very difficult six months', Jadaan said, the outlook for Gulf oil producers was 'very good' and remain so for the next six years.
'In the region... we are investing as much in conventional energy but also investing in climate change initiatives,' he added.
The Future Investment Initiative (FII) forum, which began on Tuesday, held an auction of 1.4 million tonnes of carbon credits in which 15 Saudi and regional entities participated. Aramco and two other Saudi firms were the top purchasers, a statement said.
Jadaan said global collaboration was needed to bring about stability and Gulf states would help countries in the wider region dealing with a difficult economic outlook.
Bahrain's Finance Minister Sheikh Salman bin Khalifa Al-Khalifa said Gulf countries needed to build their production and export capabilities, since the majority of their non-oil GDP was currently built on consumption and imports.