Diverting investments from oil and gas, disruptive and counterproductive – OPEC

By Akpobor Jirue, Abuja

As calls for energy to transit to Net-Zero Emissions continue to gather momentum, the Organisation of Petroleum Exporting countries (OPEC), has warned of the consequences of failure to invest in the oil and gas industry, stressing that the sector remains very relevant as it will provide more than half of the world energy needs until 2045.

OPEC Secretary General, Mohammad Sanusi Barkindo, made the disclosure in his opening remarks at the 2nd High-Level Meeting of the OPEC-GECF Energy Dialogue in Vienna, on Wednesday.

“Oil and gas together will continue to provide more than half of the world’s energy needs – with oil at 28% and gas around 24%.
“These two fuels will be the heavy-lifters of our world’s economy and energy system for the foreseeable future – supplying power and heat to homes; driving industrial machinery; keeping the world moving in the air, on land and at sea; and providing the feedstock to meet the rising demand for petrochemicals.

He stated that OPEC and all its member countries fully support a multilateral approach to addressing climate change and the energy transition. But he expressed worries that the conversation has become dominated by emotions and rhetoric rather than data and science.

Energy stability and sustainability, he said cannot be built on soundbites and headlines alone.

Speaking on the need for continuing investments in the sector, Dr Barkindo said, the consensus of the leading energy outlook is that the world will need a broad portfolio of fuel choices to support the post-pandemic recovery and, in the longer term,
meets the needs of expanding populations and economies.

Backing his claim with data, he said, OPEC outlook expects global primary energy demand to grow by 28% between 2020 and 2045.

Calling for more investment into the sector, he said, “Our industry will continue to need predictable capital to juggle the
demands for more energy and more progress on meeting global climate goals. “Throughout OPEC’s 61-year history, there have been seven major market cycles, and the two in recent years have had a profound impact on investment. Capital expenditure in the oil sector fell by a staggering 30% last year, while exploration and production spending fell by 27% in both 2015 and 2016.

“We anticipate that that investment of almost $12 trillion will be required in the upstream, midstream and downstream between now and 2045. Around 80% of this, or $9.2 trillion, will be needed in the upstream alone.

“These massive requirements clearly underline that any talk of the need to divert investment away from oil and gas is both disruptive and counterproductive. In fact, the push to deprive the industry of capital could side-track our efforts to invest in innovation, technology and new generations of highly-skilled workers to lead our industry into a lower-carbon future. I would also add here that the tightness we are seeing in the gas market could become more pronounced in the future, given the current efforts aimed at crowding out investment.

“There is no short-cut to a lower-carbon future, and you cannot short-sell vital energy assets if you are to achieve a smooth transition.

While insisting on a gradual transition, he said, the interests of the 759 million people living without access to reliable electricity, and 2.6 billion people who must rely on unsafe and unhealthy fuels to cook their meals and heat their homes, cannot be overlooked .

“Oil and gas can play a central role in the transition to a more inclusive and equitable world where everyone has access to energy.

On his part, the Secretary General, Gas Exporting Countries Forum (GECF) Yuri Sentyurin, promised that his organisation would work hand-in-hand with OPEC and Barkindo in delivering data-driven insights and expertise as well as providing reliable ground for policy and decision-makers.

“Since our 1st High-level Meeting we have been taught a lot about how vital intersectoral collaboration of oil and natural gas. GECF together with OPEC are committed to collaborating with all Member Countries at ensuring stability to the global energy, oil and natural gas markets and due to that achieving more sustainable world.

He stated that “Efficient collaboration within GECF-OPEC High-Level Energy Dialogue is now very essential as we are in the period of concerns as regards to energy crisis occurred this autumn and its complications.

“It can happen if politicians are only betting on renewable energy sources. In GECF, we consider this approach erroneous.

The meeting he said is another great opportunity to share views on how the global energy, oil and gas systems could evolve.