HOUSTON—The emergence of energy efficient vehicles likely will not have an impact on the world’s demand for hydrocarbons, particularly as the world’s middle class grows by an additional 2 billion people by 2050, said Amin Nasser, president and CEO of Saudi Aramco at this week’s CERAWeek by IHS Markit.

He described the future of oil as “misunderstood” and that the oil and gas industry is being wrongly portrayed amid an energy transition in the transportation sector, a segment that currently accounts for 20% of the world’s demand for hydrocarbons, according to Nasser.

“Many wrongly believe it is a simple matter of electric vehicles quickly and smoothly replacing the internal combustion engine,” he said. “It is not an either/or future, but far more complex.”

Nasser named five “horses” in the mix to become the power train of the future: advanced internal combustion engines, hybrid electric vehicles, plugged-in electric vehicles, fully electric vehicles and hydrogen cell fuel vehicles.

“The first three are powered by an internal combustion engine,” he said. “And let’s not forget more than 99% of the passenger vehicles on the road today have an internal combustion engine and will be with us for a long time.”

Affordability, public acceptance and driving range for alternative fuel vehicles are among the major challenges Nasser said such transportation options would need to overcome to potentially have a widespread disruption effect on the hydrocarbon industry.

“Especially when the other two horses in the race are pure battery electric vehicles and hydrogen fuel cell vehicles, they still face a range of problems,” he said. “For example, electric vehicles will not deliver rapid and economic reductions in carbon emission reduction until the electricity fuel mix becomes sufficiently clean. Even 25 years from now coal will still comprise almost 50% of the energy mix, especially in fast markets like China and India.”

A large segment of the vehicle-buying demographic of the future while likely be located in developing nations where customers will place a priority on up-front affordability and where massive infrastructure improvements are needed, not just for alternative fuel vehicles, but also those utilizing combustion engines, Nasser said.

“So yes, electric vehicles will grow and have a welcome role to play in global mobility,” he said. “But given the competition and complexity of the transition, their impact on the 20% oil demand should not be exaggerated. And that still leaves the other 80% of oil demand that continues to grow.”

Nasser said he believes the broad-based oil recovery “remains on track” as a result of economic growth in emerging markets and production restraints by major oil producers. Like others at CERAWeek, Nasser touted the need to cut carbon emissions in order to meet climate change goals, and specifically lowering emissions from internal combustion engines while finding new uses for hydrocarbons to better monetize a barrel of oil. He cited a recent agreement which Saudi Aramco recently signed centered on a technology that he said would convert almost 70% of a barrel of crude oil to petrochemicals. The result, Nasser said, would be a 30% reduction in capital costs and substantially lighter “carbon footprint of oil consumption.”

“Investment in R&D innovation by individual companies will further lighten the carbon footprint of further energy sources, and technology boosted by collaborative efforts such as the $1 billion investment by oil and gas climate initiative partners,” he said. “In other words, I’m not losing any sleep over big oil demand or stranded resources. Oil and gas will continue to play a major role where all energy sources are required for the foreseeable future.”

Nasser also gave an update on the state of Aramco’s potential IPO, which he said was progressing “very well.”

“The question that’s being asked is when and where in terms of where we will be listed and when,” he said. “This is a shareholder decision and it’s up to the shareholder to decide. 

Brian Walzel can be reached at bwalzel@hartenergy.com.