Russia and Saudi Arabia reject calls to end oil and gas spending

ST. PETERSBURG, Jun 7, 2021, CNBC. Two of the world’s largest oil-producing countries plan to defy the International Energy Agency’s recommendations and continue investing in oil and gas, rejecting calls to drastically scale back the use of fossil fuels despite a deepening climate crisis, CNBC reported.

Policymakers are under immense pressure to deliver on promises made as part of the Paris Agreement, a landmark accord widely recognized as critically important to avoid the most devastating impact of climate change.

Almost 200 countries, including Russia and Saudi Arabia, ratified the Paris climate accord in 2015, agreeing to pursue efforts to limit the planet’s temperature increase to 1.5 degrees Celsius above pre-industrial levels. The agreement requires net-zero greenhouse gas emissions by 2050.

Remarkably, the IEA — the world’s leading energy advisor — delivered its starkest warning yet on global fossil fuel use last month, saying the exploitation and development of new oil and gas fields must stop this year if the world wants to reach net-zero emissions by the middle of the century.

Speaking at the St. Petersburg International Economic Forum on Thursday, Russian Deputy Prime Minister Alexander Novak said the IEA had ostensibly arrived at its findings “by using reverse calculations” on how to achieve net-zero emissions by 2050.

The IEA was not immediately available to return a request for comment. To be sure, the top global watchdog says halting developments in oil, gas and coal is fundamental to reaching the internationally agreed goal of net-zero emissions.

“In my view this a simplistic approach. It is also unrealistic,” Novak told CNBC’s Hadley Gamble, according to a translation.

“There is no doubt we need to move in the green energy and toward the green agenda as there is demand for it in society, but we need to be clear what resources this can be done with, who is going to pay for it, what technologies and opportunities we have available to us, including in order to resolve outstanding problems that still await their solutions,” he added.

His comments come shortly after Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman joked about the IEA’s report at an online news conference earlier this week.

“It is a sequel of the ‘La La Land’ movie. Why should I take it seriously?” Abdulaziz said, according to Reuters.

His reaction to the report came shortly after OPEC and non-OPEC partners — an energy alliance known as OPEC+ — agreed to gradually ease production cuts in coming months amid a rebound in oil prices.

Saudi Arabia is “producing oil and gas at low cost and producing renewables. I urge the world to accept this as a reality: that we’re going to be winners of all of these activities,” he added.

Speaking to CNBC on Thursday, Novak said Abdulaziz had once again reaffirmed Riyadh’s commitment to invest in oil at a SPIEF panel earlier that day.

Novak said it was Moscow’s intention to do the same.

“I can assure you that the Russian Federation, its plans, its strategy [is to] continue to invest in both oil and gas and in coal. But we also invest in renewables as well, in hydrogen, in electric cars and electric charging stations, so we see the coming decade as using a mix of renewables and fossils fuels,” Novak said.