Emmanuel Addeh in Abuja
The Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), Dr. Sanusi Barkindo, yesterday warned that if the calls to halt investments in the oil and gas sector are heeded, the current crisis in the gas market could worsen.
In recent times, climate change activists, a number of big oil’s board members, the International Energy Agency (IEA) among others, have been pushing for defunding of projects in the industry to accelerate the global transition to net-zero emissions.
But speaking at the second High-Level Meeting of the OPEC-Gas Exporting Countries Forum (GECF) Energy Dialogue, Barkindo argued that although the oil producers’ cartel was not against investment in renewables, it would be “disruptive and counterproductive” to suddenly abandon the sector.
The OPEC helmsman maintained that the objective consensus of the leading energy outlook was that the world would need a broad portfolio of fuel choices to support the post-pandemic recovery and, in the longer term, meet the needs of expanding populations and economies.
He reiterated that the OPEC outlook expects global primary energy demand to grow by 28 per cent between 2020 and 2045, explaining that the projections show that nearly all energy sources will be needed in the coming years.
Barkindo noted that although this growth would be led by renewables, which will rise from a global fuel share of around 2 per cent in 2020 to over 10 per cent by 2045, gas will see the second highest growth during the period.
Even by 2045, Barkindo argued that oil and gas together would continue to provide more than half of the world’s energy needs – with oil at 28 per cent and gas around 24 per cent.
The former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) insisted that these two fuels would be the “heavy-lifters” of the world’s economy and energy system for the foreseeable future.
Given the current expectations, the secretary general insisted that the industry will continue to need predictable capital to juggle the demands for more energy and more progress on meeting global climate goals.
He emphasised that throughout OPEC’s 61-year history, there had 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 per cent last year, while exploration and production spending fell by 27 per cent 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 per cent 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,” he maintained.
In his remarks, Secretary General of the GECF, of which Nigeria is a member, Yuri Sentyurin, said that concerns as regards energy crisis occurring this autumn and its complications may become a reality if politicians are only betting on renewable energy sources.
Stressing that it is too early to write off hydrocarbons, particularly oil and natural gas, he expressed the belief that energy customers should not repeat European mistakes by relying on spot market supplies instead of securing long-term contracts.
Already, he noted that a spike in gas and power prices is wreaking havoc in Europe’s economy, stressing that gas has been and will remain the most practical option to attain energy transition as well as spur economic growth and social progress in Europe and anywhere in the world.