Saudi Arabia backs COP28 deal, praises flexible approach taken in Dubai

Saudi Arabia's energy minister Prince Abdulaziz bin Salman said on Wednesday that Riyadh supported the final COP28 deal as it leaves countries to decide for themselves on suitable pathways to transition to cleaner sources of energy.

More than 100 countries had lobbied for strong language to "phase out" oil, gas and coal use, but faced opposition from the Saudi-led oil producer group OPEC, which argued that the world can slash emissions without shunning specific fuels.

"What is there now, the issue of immediate and gradual disposal (of fossil fuels) has been buried," Prince Abdulaziz said in an interview with Saudi-owned Al Arabiya television, adding that the deal would not affect the ability of the world's top oil exporter to sell its crude.

"The pharaoh methodology of dictating things has been buried, and so people are free in their choices," he said, referring to a set time frame for phasing out hydrocarbons.

Prince Abdulaziz thanked the UAE, saying there was full cooperation and coordination between the two countries.

"There was a perfect cooperation between us, they did not leave us, we were always constantly coordinating and consulting, and we were given priority that I don’t think I have ever seen it in any such conference," he said.

The prince referred to the text of the agreement which stipulates that countries transition according to their "nationally determined manner" and according to "different national circumstances, pathways and approaches."

"They are mostly reaffirming our understanding of the climate change agreement, leaving countries without restrictions passed down from entities that are not party to your decision making is what is important," he said.

Prince Abdulaziz has been in Dubai personally leading negotiations in the past few days with key countries, including the United States.

"There are a number of countries that produce oil and gas, you know who they are, but they stepped up and said we want this to succeed and they said we are transitioning," U.S. climate envoy John Kerry told reporters after the deal was passed.

"Saudi Arabia for instance is a very big producer and Prince Abdulaziz came and stayed and negotiated."

Members of the Organization of the Petroleum Exporting Countries (Opec) control nearly 80% of the world's proven oil reserves along with about a third of global oil output, and their governments rely heavily on those revenues.

Oil industry welcomes deal

Opec Secretary General Haitham Al Ghais congratulated the UAE for "the consensual and positive outcome" of COP28, in a joint statement with the Gas Exporting Countries Forum.

"Without adequate levels of investment, the future of our industry is in jeopardy," it quoted Al Ghais as saying.

"Part of this effort entails ensuring a balanced narrative on energy transitions and, when necessary, correcting misguided messages related to both hydrocarbon fuels and our industry".

SEB analyst Ole Hvalbye said the deal emphasizes an important role for natural gas in the energy transition, which the industry has long said was necessary to reduce use of coal and oil as renewable capacity ramps up.

"This mindset is now shared among producers and consumers: we have recently seen companies both in Europe and in Asia signing close to 30-year LNG purchase agreements," Hvalbye said.

Majid Jafar, CEO of Crescent Petroleum, said the deal recognised the importance of the "energy trilemma" of affordability, availability and sustainability and that demand for fossil fuels needed to be reduced, not just its production.

The transition "must be just and orderly and equitable - keeping the growing energy needs of the developing world in mind," he said.

TD Securities commodity strategist Daniel Ghali said most demand growth would come from petrochemicals, which would be hard to phase out, as the middle class in India and China grow.

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