Saudi Aramco says electric vehicles won't heavily impact oil demand
- The world's biggest energy company is attempting to make traditional engines more efficient.
- Saudi Aramco says it doesn't fear electrification as it will remain a small part of transportation markets.
The world's largest energy company says the electrification of vehicles isn't anywhere near ready to overtake the traditional engine in the transport sector.
The transport industry accounts for more than half of oil demand and last year Morgan Stanley forecast that by 2025 there could be 36 million electric vehicles on the road globally. Further analysis at IHS Markit claimed that 30 percent of new car sales by 2040 would be electric. The switch from gasoline and diesel cars to electric powertrains has led some to suggest that global oil consumption could fall.
Meanwhile, the state-owned oil giant Saudi Aramco produces roughly 10 million barrels of crude a day, suggesting that any fall in demand could be highly damaging to the business.
But Chief Technology Officer, Ahmad Al Khowaiter, told CNBC's Annette Weisbach at the Geneva Motor Show Tuesday that electrification is not about to defeat the internal combustion engine (ICE) any time soon.
"The consensus from forecasters is that the internal combustion engine will be with us for decades to come," he said, before adding "We are still expecting 90 percent of vehicles to be driven by ICE by the mid-century."
Al Khowaiter is at the Geneva International Motor Show in a bid to showcase how his firm can help bring down emissions in a traditional ICE engine. He argued that, at least in the medium term, making gasoline and diesel engines more efficient would be the best way to reduce emissions.
"We see a lot of value in improving the efficiency of the ICE which is a primary source of energy for much of what we are talking about. So even electrified vehicles get their source of energy from a power plant somewhere," he said.
The executive said Saudi Aramco views working with the auto industry on reducing emissions as part of its "responsibility."