The head of oil giant Saudi Aramco on Tuesday said a lack of recent investments in the oil sector could lead to a shortage of supplies. “Not much investments have been going into the energy sector... $1 trillion has been either deferred or cancelled” amid the price slump of recent years, Aramco CEO Amin Nasser said at an investment conference in Riyadh.

Of that, $300 billion was due for investment in oil exploration and $700 billion for project development, he said. “This will have an impact on the future of energy if nothing happens,” Nasser said, pointing to additional needs due to “natural depreciation of fields and normal rise in demand”.

Nasser also said renewable energy will not threaten the position of oil and natural gas as the main global energy sources. “We are witnessing a transformation... But it will be decades before renewable energy takes a major share in the energy mix,” he said at the Saudi Future Investment Initiative conference.

Global oil prices more than halved in 2014 because of oversupply and weak global economic growth. The prices have made a partial recovery after producers from OPEC and non-OPEC countries agreed last year to cut production by 1.8 million barrels per day (bpd). 

The initial six-month deal was further extended by nine months until the end of March. Saudi Arabia, the world’s top oil exporter, made the largest cut of around 500,000bpd. It has said it will increase the reduction to 560,000bpd in November.

The kingdom has lost hundreds of billions of dollars in oil revenues since mid-2014 and as a result posted huge budget deficits. It has launched a package of economic reforms that include a plan to sell up to 5 per cent of state-owned Aramco.

Speaking at the conference, the managing director of Saudi Arabia’s state-owned Public Investment Fund, Yasir Al Rumayyan, reiterated that an Aramco initial public offering is on track for next year. Nasser said on Monday that the IPO, expected to raise $100 billion if Aramco is valued at $2 trillion, will take place in the second half of 2018.