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Aramco Attacks: Potential Swing Towards Clean Energy

On September 14, 2019, at 4:00 AM local time, Saudi Arabia’s state-run oil company, Aramco, was attacked by targeted missile strikes from roughly ten drones. The attack was on two of Aramco’s largest refineries, dramatically disrupting the global supply of oil; Aramco produces 5% of the world’s petroleum. Houthi rebels in Yemen took responsibility for these attacks. However, the Trump administration believes the attack originated from Tehran. To make matters worse, the following Sunday, President Trump tweeted that the United States was “locked and loaded” for a retaliatory strike against Iran. Cabinet members, including Secretary of State Mike Pompeo, also accused Iran of being the culprit of the attacks, labeling the events an “act of war.”

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Amid this turbulence, it’s important to look at historical context. In May of 2018, Trump pulled out of the Iranian Nuclear Deal of 2015. Since then, relations between the U.S. and Iran have waned. In May of 2019, the U.S. deployed its Navy to the Persian Gulf simultaneously as sanctions on Iran’s oil revenue took full effect. Within a few weeks, oil tankers in the gulf were attacked, which the U.S. blamed on Iran, stating that they used naval mines to destroy the tankers. Iran also seized some tankers, which further increased tensions. In late June, Iran shot down a U.S. Navy drone, which nearly prompted a military response from President Trump.

The last thing the international community wants is for Saudi Arabia and Iran to engage in military conflict. Both countries have faced long-term tension vying for religious, economic and cultural dominance in the Middle East. Saudi Arabia has long been backed by the United States because of interest in Saudi natural resources. A conflict between the two Middle Eastern powers would likely draw in the U.S., broadening the conflict to the international stage, where Iran’s allies, like Russia and China, could potentially get involved as well. Fortunately, events took a more positive turn on September 25, when Iranian oil minister Bijan Zanganeh told an energy conference in Moscow that “Prince Abdulaziz bin Salman (Saudi Arabia’s new energy minister) has been a friend for over 22 year. Despite this long-term up and down political relationship between Iran and Saudi Arabia we have been friends and I hope to be friends in [the] future, we have no difficulty with him.” In fact, later in the press conference, Zanganeh alluded to the true enemy being another country not in the region. Is this a hint of dissent against the U.S.? Most would say yes. 

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These attacks also open a broader question about consumption and the world’s dependence on oil. Oil production and use is not only finite, but  also harmful to the environment. Oil can have a treacherous effect on aqueous ecosystems. In rivers, lakes, and oceans, oil spreads as a thin layer on the surface and prevents oxygen from reaching marine life below. Oil harms animals and insects, prevents photosynthesis, takes a long time to break down, and thus disrupts food chains. The burning of oil increases the output of greenhouse gases into the atmosphere, which contributes to climate change and sea level rise. Oil contamination can make water unsuitable for drinking and irrigation, and in the Middle East the quantity of water is finite and constantly depleting. 

Because oil is both a point of diplomatic contention and harmful to the environment, Saudi Arabia announced on September 29 that they will begin to offer loans for renewable energy projects and manufacturers. The program is called Mutjadeda. The 105 billion-riyal ($28 billion) Saudi Industrial Development Fund will give loans of as much as 1.2 billion riyals, depending on a company’s ownership and their standing with the Saudi government. The plan involves targeting renewable energy component manufacturers as well as independent production projects at an entrepreneurial and corporate level. The fund will also offer financing for firms in other sectors that want to start using such energy. The main focus is on solar and wind farms. Ahmed Al-Gwaiz, the industrial fund’s vice president of risk management, says “Our objective is really to find new sources of energy to be less dependent on oil and to enable the manufacturing sector to continue its progress.” Saudi Arabia’s energy ministry has appointed Faisal Al Yemni as head of its renewable energy project development office. Al Yemni is in charge of leading the country’s National Renewable Energy Programme, which hopes to install around 60 Gigawatts of clean energy capacity by 2030, of which 40GW will come from solar photovoltaic, 16GW from wind energy, and 2.7GW from concentrated solar power. Saudi Arabia recently revised its renewable energy target from 9.5GW to 27.3GW to be achieved by 2024.

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Nationalization of natural resources and the advancement of renewable energy have been spearheaded in the region by Saudi Arabia, the world’s leading petroleum-exporting country. However, there is hope in the international community that Saudi Arabia’s charge towards clean energy and sustainability will create a domino effect in the region.

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