Amin Nasser, president and CEO of Saudi Aramco, firmly believes the future of the oil and gas industry is secure, despite the advent of alternative fuel vehicles allegedly signaling that the end is nigh. Nasser, speaking at CERAWeek by IHS Markit in March, said the emergence of energy efficient vehicles likely will not have a widespread impact on the world’s demand for hydrocarbons, particularly as the world’s middle class grows by an additional 2 billion people by 2050.

He described the future of oil as “misunderstood” and said he believed 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 fuel cell 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.”

In fact, the number of vehicles worldwide is expected to more than double over the next three decades. In the BP Technology Outlook 2018, the company reported that “the world’s total number of cars, vans and light trucks—the global ‘light-duty vehicle fleet’—could grow to around 2.6 billion vehicles in 2050 from 1.2 billion in 2015.”

But Nasser indicated it remains to be seen how much of that growth will come in alternative fuel vehicles. 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 will likely be located in developing nations where customers will place a priority on upfront 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 to meet climate change goals. He suggested lowering emissions from internal combustion engines while finding new uses for hydrocarbons to better monetize a barrel of oil. He cited a recent agreement that Saudi Aramco signed centered on a technology that he said would convert almost 70% of a barrel of crude oil to petrochemicals. The result would be a 30% reduction in capital costs and substantially lighter “carbon footprint of oil consumption,” Nasser said.

“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.”

For the industry to continue to play that role, Nasser cited several key areas in which he said “bold action” needed to be taken. Among those were an increased need to expand exploration as well as a need to offset the decline in developed oil fields while also meeting the world’s growing oil demand.

“Even conservative estimates suggest that 20 billion barrels per day of new capacity is required over the next five years,” he said.

Nasser also called for $20 trillion more in investments over the next quarter century to meet the rising demand for oil and gas. Finally, Nasser said oil companies needed to “intensify their efforts for in-house current technologies as well as create new, game-changing ones.

“That requires us to dedicate more resources to longer-term research, especially to low- to no-carbon products,” he said. “And it means regulators must be policy holistic and technology agnostic. Let the market decide.”

Nasser also gave an update on the state of Saudi Aramco’s potential IPO, which he said was progressing “very well.” “The question that’s being asked is when and … where we will be listed,” he said. “This is a shareholder decision and it’s up to the shareholders to decide.”

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