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Saudi Aramco launches $1.5 Billion fund and says its energy transition plan is flawed By Stocksak

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© Stocksak. A helmet sporting the logo of Saudi Aramco is seen at the oil facility Abqaiq in Saudi Arabia, October 12, 2019. REUTERS/Maxim Shemetov/Files

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By Rachna Uppal, Maha El Dahan and Aziz El Yaakoubi

RIYADH (Stocksak), -Oil great Saudi Aramco (TADAWUL 🙂 Wednesday’s launch of a $1.5 Billion fund to support a inclusive global energy transition was announced by Saudi officials. They stated that the transition from oil and gas could take decades, and that it would be necessary to continue investing in conventional resources.

Saudi Arabia, the largest oil exporter in the world, and fellow OPEC producers warned about underinvestment in fossil energy, particularly when spare capacity is low and demand is healthy despite economic headwinds.

“The current plan for transition is flawed. It is not delivering. We need an optimal, realistic plan for transition,” Amin Nasser, CEO of Aramco, stated at a business forum. He also announced the new Aramco Ventures fund.

“We need realize that today’s energy demands are too high for the alternatives available. We need to work in parallel to find alternatives until they are available.”

The Aramco sustainability fund would invest globally with an initial focus on carbon capture and storage, greenhouse gases emissions, hydrogen, ammonia, and synthetic fuels.

Saudi Arabia and the other Gulf Arab countries have worked together to improve their environmental credentials. Riyadh stated last year that the kingdom aims for net zero greenhouse gas emissions by 2060. Most of these greenhouse gases are produced by burning fossil fuels.

Saudi Finance Minister Mohammed al-Jadaan stated to the FII gathering, “now became more realistic that actual transition will take… possibly thirty years”, and that conventional resources remained essential to ensure security of supply.

Jadaan said that the global economy faces “very difficult” six months, but that the outlook for Gulf oil producer was “very good” for the next six-years.

He said, “In the region…we are investing as much conventional energy as we are in climate change initiatives,”

The Future Investment Initiative (FII), which started on Tuesday, hosted an auction of 1.4million tonnes of carbon credits. 15 regional and Saudi entities participated. Aramco and two additional Saudi companies were the top purchasers, according to a statement.

Jadaan said that global collaboration is necessary to bring stability, and the Gulf states will help countries in the wider region who are facing a difficult economic outlook.

Sheikh Salman bin Khalifa Al-Khalifa, Bahrain’s Finance Minister, said that the Gulf countries must increase their production and export capacities as a majority of their non-oil GDP is based on imports and consumption.

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