As much as US$1 trillion of investments has either been deferred or canceled with the lower-for-longer oil prices, and this underinvestment will impact the future of energy, Amin Nasser, the chief executive of Saudi Aramco, said on Tuesday.

“Not much investments have been going into the energy sector... $1 trillion has been either deferred or cancelled,” Nasser said at the Future Investment Initiative conference in Riyadh.

Of the US$1 trillion investment, US$300 billion was earmarked for oil exploration and another US$700 billion for project developments, according to the CEO of the state-held oil giant of OPEC’s biggest exporter and de facto leader Saudi Arabia.

“This will have an impact on the future of energy if nothing happens,” Nasser noted, adding that investments are necessary because of “natural depreciation of fields and normal rise in demand.”

“We are witnessing a transformation... But it will be decades before renewable energy takes a major share in the energy mix,” the head of the oil giant said.

In July, Nasser said that if the oil and gas industry didn’t start investing again, the global oil supply/demand curve will reach a turning point in “a couple of years.”

“About $1 trillion in investments have already been lost since the current downturn began,” Nasser said in a speech at the World Petroleum Congress in Istanbul in July.

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According to the International Energy Agency (IEA), upstream oil and gas investment is set to rebound modestly this year, following a 44-percent plunge between 2014 and 2016. The IEA expects oil and gas upstream investment to rise by 3 percent this year, thanks to a 53-percent surge in U.S. shale investment and resilient spending in big producing regions such as the Middle East and Russia.

Due to companies’ continual slashing of investments, global oil discoveries fell to a record low in 2016, and the number of sanctioned conventional oil projects hit their lowest level in more than 70 years, the IEA said in April, warning that the trend could continue this year.

By Tsvetana Paraskova for Oilprice.com

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