Chineme Okafor in Abuja
The Organisation of Petroleum Exporting Countries (OPEC) has said it does not believe in repeated predictions that the end was near for oil as a major energy source of the world, stating that contrarily oil has a bright future.
OPEC’s Secretary General, Dr. Mohammad Barkindo, said at a recent meeting of the group in Baghdad – Iraq, that predictions of the end of oil have significantly impacted the global financial markets, as well as investment decisions.
Barkindo, also said such prediction had caused policy makers to become anxious, claiming that it showed that sentiment, speculation and rumours have played important roles as market drivers in this regard, often causing a disconnect between prices and market fundamentals.
He further noted that despite technological innovation, the idea of peak oil supply has not materialised, and that at the beginning of the 2010s, reports of peak supply were almost omnipresent, but the industry was about to conclude the decade and the worry has shifted to concerns about peak demand.
“Pick up a newspaper today or read an article online and one of the most common refrains is that demand for oil is about to plateau or decline.
“Such thinking has been heavily influenced by advocates of renewable energy and the electric-car lobby, who champion the idea that hydrocarbons are on the verge of being replaced by renewable forms of energy,” said Barkindo.
Barkindo, said he would not diminish some of the important arguments and valid points which both proponents of peak supply and peak demand have made.
According to him: “They both contain a degree of what Blake Clayton described as ‘irrational anxiety.’ Peak demand fears do not necessarily reflect market fundamentals or the overwhelming majority of long-term forecasts of most reporting agencies.
“So, to all stakeholders in the oil industry, particularly the investment community and policy makers; I wish to make an appeal: do not let your views on the oil industry be determined by the loudest voices; the overreactions or the excessively bullish or bearish.
“Instead, look at the facts; focus on the fundamentals. And when looking at the fundamentals, in both the short-term and long-term, it is clear that the future of this industry is bright,” he added.
Providing the specifics on oil industry fundamentals, Barkindo said in the long term, OPEC’s World Oil Outlook (WOO) had shown that world oil demand would grow considerably in the future.
“Long-term oil demand is expected to rise to almost 112 mbd by 2040. This will be primarily driven by developing countries: their expanding middle class, high population growth rates and strong economic potential.
“Looking at the road transportation sector and the idea that electric vehicles are about to replace conventional vehicles; it should be noted, that according to our WOO, although the rate for new sales of electric vehicles is very high, the share in total stock in 2017 was just 0.3 per cent and 1.3 per cent of total vehicle sales,” he explained.
He further stated that the long-term share of electric vehicles in the total fleet has been projected to expand and reach a level of around 13 per cent by 2040, while conventional vehicles will constitute the majority of growth of the total vehicle fleet.
“For example, ICE vehicles are expected to maintain their dominant share of new commercial vehicle sales over the forecast period. Although their share declines from 96 per cent in 2017 to 81 per cent by 2040, this still constitutes an overwhelming majority,” he added.
Barkindo stated that while people talked about energy transition with emphasis on energy efficiency and environmental consideration amongst others, unfortunately, energy poverty remained a scourge to the world.
He said: “The total number of people with access to electricity is just below one billion. Three billion people still lack access to clean fuels for cooking. An energy transition should not forget these realities and we should strive for a more inclusive world – where every person has access to energy.”