Home / Industry / Energy /  Ahead of COP26, Saudi Arabia resists calls to cut oil investment

Ahead of COP26, Saudi Arabia Resists Calls to Cut Oil Investment


The kingdom is pushing fellow producers to line up against calls for cutting investment in new oil and gas development

Saudi Arabia is pushing fellow oil producers to present a united front at climate talks that start this month and oppose rising calls for a reduction in fossil-fuel investment, say people familiar with the strategy, arguing that such a move could further push up energy prices.

The kingdom, along with key oil-producing allies, including the Organization of the Petroleum Exporting Countries, is arguing publicly and privately that any calls for lower investment in new oil and natural gas development endorsed at a United Nations climate summit that kicks off on Oct. 31 in Glasgow, Scotland, could lead to higher prices and widen the gap between rich and poor countries.

Oil-producing countries have emerged as a formidable group that is resisting what they describe as an unrealistic push by rich nations to limit fossil fuel investment as a way of lowering greenhouse gas emissions. The International Energy Agency, a group that monitors energy issues and whose members include much of the developed world, said in May that governments and companies should immediately cease investment in new oil and gas development if the world wants to achieve net-zero carbon emissions by 2050.

Alok Sharma, the British cabinet minister who is chairing the Glasgow meeting, called COP26, has repeatedly said he plans to use the IEA’s net-zero emissions target as a template for the talks. A COP26 spokesperson said Mr. Sharma “has been clear all countries need to pick up the pace on driving down emissions and safeguarding people and nature from the worst effects of climate change."

He declined to comment on specific conversations with Saudi Arabia.

Prince Abdulaziz bin Salman, the Saudi energy minister, and Saudi Arabia’s envoy to the Glasgow summit, Khalid Abuleif, have asked like-minded oil producers, including Nigeria, Kuwait and Oman, to push back against the IEA’s investment recommendation, according to people familiar with the matter. Prince Abdulaziz is pushing the argument that such a rigid zero-investment target for new oil and gas development would reduce supply before global demand drops significantly, risking an oil-price superspike, according to people familiar with the talks. An investment ban also isn’t fair to economies that are overly dependent on importing or exporting oil and gas, these people say.

A spokesman for the U.N.’s Intergovernmental Panel on Climate Change said it “does not comment on the contents of draft reports while work is still ongoing." He added that “the ultimate text of the [its] reports is decided by scientists, based exclusively on underlying scientific evidence." The Saudi Energy Ministry didn’t return a request for comment on the BBC report.

Saudi Arabia is among a handful of nations, along with China and India, that have yet to submit their latest official plans in cutting emissions. Plans from member governments are due ahead of the summit and are expected to be a starting point for the two-week talks.

Negotiators want to reaffirm a commitment made at a similar meeting in Paris in 2015 that called on governments to limit the rise in global temperatures to close to 1.5 degrees Celsius compared with preindustrial days.

Riyadh’s role as the world’s largest crude oil exporter, and its reluctance so far to commit to specific emissions cuts, has made it a key focus in the diplomatic positioning and negotiations already taking place among countries ahead of the talks. John Kerry, the chief climate envoy for the Biden administration, is expected in Riyadh this weekend to meet Crown Prince Mohammed bin Salman.

Saudi Arabia has told global oil industry executives and international investors that it is committed to investing in its oil fields to expand production and has no plans to curb such spending, according to people familiar with its position. In a private conference for Bank of America clients and analysts in June, Prince Abdulaziz, the Saudi energy minister, said the country would pump “every molecule" of its hydrocarbons, according to people who attended the meeting. Bank of America declined to comment.

Saudi Arabia has launched an aggressive, public campaign to help wean its economy off oil, but the effort has struggled to make much of a dent in the kingdom’s economic reliance on pumping and selling crude. More recently, it has redoubled its commitment to those exports, investing to produce even more crude.

Saudi Arabia and other producers have said investment is crucial to provide oil for a world that will need plenty of it for decades to come. Earlier this month, the head of OPEC said today’s energy crisis was a “wake up" call for consuming nations.

Saudi Arabia is trying to steer the debate in other ways. Saudi officials have asked scientists at the secretariat of the U.N. Framework Convention on Climate Change to drop their reference to “net zero" emissions, a term they used in an August report, according to people familiar with the push. The U.N. typically asks member countries to comment on such reports and Saudi Arabia’s requests came through this feedback process.

Saudi Arabia has also asked that the term “carbon emissions" be replaced with “greenhouse gas emissions," a broader term that covers all emissions leading to global warming and not just those that come from burning fossil fuels, the people said.

The British Broadcasting Corp. reported earlier this week that Saudi Arabia was among a handful of countries seeking to change wording related to fossil fuel investment in a draft report of a working group of the IPCC. The BBC cited leaked documents obtained by environmental advocacy group Greenpeace.

The U.N. Framework Convention on Climate Change, which oversees the U.N.’s climate-change efforts, didn’t return a request for comment.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Edit Profile
My ReadsRedeem a Gift CardLogout