Oil demand to rise in China, says CTO of Saudi Aramco

3.Have you been facing more pressures due to the energy conservation and emission reduction moves? If so, could you tell us a little bit about the pressures and the measures taken to counter the same? Did the moves entail additional investment for energy conservation and emission reduction?

Energy conservation and emissions reduction is truly a global challenge. A hallmark of our commitment to society is Saudi Aramco's great emphasis on minimizing our operational impact on environmental and human health.

We have reduced our CO2 footprint six-fold over the last four decades through a number of measures extending across our different operations. Examples include reducing gas discharge from production wells by installing zero-discharge technologies; reducing gas flaring from refineries and gas plants; and adopting highly efficient power generation systems to support energy-intensive operations.

The volume of flared gas was reduced by around 10 billion standard cubic feet in 2014 compared to 2013, enabling the company to maintain the volume of flared gas well below 1 percent of total raw gas production for the third consecutive year. These exceptional efforts made Saudi Aramco a global leader in flare minimization and earned us the World Bank Award of Excellence in 2012.

Saudi Aramco is also a world leader in maximizing efficiency benefits of combined steam and power generation. The introduction of the Manifa cogeneration plant in 2014, combined with the Abqaiq cogeneration plant's enhanced performance, resulted in significant gas savings of 181 million standard cubic feet per day.

Today, one of our most strategic research areas is our work in carbon management and transport energy efficiency. Two months ago we began operating one of the largest CO2 injection pilot projects in the world, where we are injecting nearly 1 million tons of CO2 per year at Uthmaniyah field. This study will allow us to gauge the technical potential for CO2 sequestration as well as the economics of CO2 enhanced oil recovery (EOR).

In transport efficiency we are conducting groundbreaking research in advanced engine technology. Our R&D teams in Dhahran, Paris and Detroit are working on new fuel formulations and combustion modes in internal combustion engines. For instance, a new engine concept called Gasoline Compression Ignition using low-octane gasoline-like fuels will be as efficient as modern diesel engines, meet future emissions requirements, have a simpler and less-costly design, and use less-processed fuels like naphtha which under the current demand trends are expected to be in excess supply.

4.How would you rate you company's performance in China during 2014? Over the next five years, do you see an increase/decrease in China's contribution to your global business? Having said that, do you also foresee any major risks in the China market over the long term?

We had an excellent 2014 performance; we had many accomplishments, and are going strong meeting China's growing oil and chemicals demand. To serve our Chinese crude-oil clients better and emphasize our role as China's most reliable crude oil supplier, we expanded our Asian headquarters in Beijing and branch offices in Shanghai and Xiamen. During 2014, as part of our expanding global research network, we established our latest center, the Beijing Research Center which was officially inaugurated this past April. The 4,400-square-meter center aims to enhance Saudi Aramco's research capabilities, and more importantly, brings greater potential to the already-vibrant bilateral technology collaboration with our partners in China.

We definitely see China as a growing contribution to our business, not only over the next five years but for many more years to come. Not only in the traditional terms of crude oil volume of business, but more importantly in terms of quality of contribution. As we expand our presence in China, we have moved beyond the sale of crude oil to investments in higher value chemicals with our petrochemical ventures. Now our most recent investment has been the establishing of our research center in Beijing which we hope will bring the greatest contribution and returns. With this we are investing in the talent of the Chinese people, which we believe will yield innovations and solutions that we can apply to our business around the world.

5.What are your views on the government's added focus on Public-Private-Partnership projects? Has your company been party of any such projects before? If so, could you share with us some interesting anecdotes or case studies? Does your company plan to be a part of the future PPP projects in China?

Due to the scale of our operations and projects, and our unique role in the development of the Kingdom of Saudi Arabia, we have had very positive experiences with public-private partnerships. Given our experiences, we understand and appreciate the Chinese government's added focus on such projects.

Today as we speak, in Saudi Arabia for example, we are engaged with several public sector organizations in the development of a major Maritime Yard on the Arabian Gulf coast, in the center of our offshore oil operations. The Maritime yard will serve the needs of our growing offshore oil operations as well as the Kingdom's growing demand for ship-building, and MRO operations.

With regard to projects in China, we continue to evaluate opportunities that expand our business and contribute to the growth of China in a win-win manner.