The chief executive of Saudi Aramco has said European governments’ efforts to tackle the energy crisis are “not helpful”.
Amin Nasser, who leads the world’s largest oil exporter, said plans to cap consumer bills and tax energy companies were not long-term solutions to the global crisis.
Nasser told a forum in Switzerland: “Freezing or capping energy bills might help consumers in the short term, but it does not address the real causes and is not the long-term solution.
“And taxing companies when you want them to increase production is clearly not helpful.”
The energy crisis that began last year was exacerbated by Russia’s invasion of Ukraine, pushing up oil and gas prices and feeding through to consumer and business bills.
Governments in Europe have sought to cushion the blow by spending hundreds of billions of euros on subsidies and tax cuts.
Last week the EU announced plans to raise about €140bn (£121bn) by imposing windfall taxes on energy companies’ “abnormally high profits” and redirecting proceeds to households and businesses struggling with soaring bills. In the UK, the former chancellor Rishi Sunak unveiled the energy profits levy on North Sea oil and gas operators in May.
Nasser said the root cause of the crisis had come from underinvestment in fossil fuels at a time when alternative energy sources were not yet readily available.
He said: “The conflict in Ukraine has certainly intensified the effects of the energy crisis, but it is not the root cause. Sadly, even if the conflict stopped today as we all wish, the crisis would not end.”
Aramco has been investing to raise the kingdom’s oil capacity to 13m barrels a day by 2027, but Nasser said globally investments in hydrocarbons were still “too little, too late, too short term”.
The underinvestment comes at a time when spare capacity is thin and demand is “fairly healthy” despite strong economic headwinds, he added.
Nasser said: “When the global economy recovers, we can expect demand to rebound further, eliminating the little spare oil production capacity out there. That is why I am seriously concerned.”
Last month Saudi Aramco underscored the huge profits made by gas and oil-rich nations during the energy crisis by revealing profits in the three months to the end of June up 90% to $48bn (£40bn). The figure is thought to be one of largest quarterly profits in corporate history.
