General of the Organisation of Petroleum Exporting Countries (OPEC), Dr. Sanusi Barkindo, has expressed concern over declining investment in the oil sector which may lead to price volatility if the decline is left uncurbed.
The Nigerian-born OPEC chief, who spoke in an address at the special meeting of the organisation’s Economic Commission Board (ECB), which held via videoconference, explained that due to the nature of the industry, there was a very high chance that the resilience of the market may be tested again without adequate project funding.
The ECB is made up of the secretary general as the chairman, the national representatives of member countries as members and the director of the secretariat’s research division as the board’s coordinator.
Barkindo noted that such a volatile situation is not something that any member of the oil producers’ group will want to encounter, insisting that crude oil will continue to remain relevant despite the push for renewable energy sources.
A number of countries in the developed world and big oil giants have recently ramped up their advocacy for the jettisoning of fossil fuels due to its carbon emissions capabilities, setting 2050 as the point zero carbon emissions will be achieved.
But Barkindo at the 21st edition of the meeting of the ECB, the organisation’s economic and technical think-tank, explained that with increasing global energy demand fuelled by growing world population, all forms of energy will still be required in the next 25 years.
“Global primary energy demand is forecast to increase by 28 per cent between 2020 and 2045 to meet this rapidly rising needs. All forms of energy will be required, especially in light of a rapidly growing global population expected to rise by 1.7 billion people by 2045 and an expected doubling of the global Gross Domestic Product (GDP).
“Although renewables will see the largest incremental growth, oil still is top spot in the energy mix. It is worth highlighting that soaring demand at these levels will require massive industry investment.
“In 2020, however, investment dropped by roughly 30 per cent. This was predominantly due to the pandemic and heightened investments as a reaction to the energy transition.
“If the industry does not get adequate investment, we could fall short of supply and face unwanted volatility in the market. I can assure you that these are the eventualities that no energy stakeholder wants to see.
“OPEC member countries are fully committed to investing in oil and gas industries, and they understand that it is only possible through the sustainable stability that continues to be underpinned by the partners of the Declaration of Cooperation (DoC),” he stated.
The former Nigerian National Petroleum Corporation (NNPC) Group Managing Director pointed out that the ECB was carrying out a detailed technical review of the organisation’s World Oil Outlook (WOO) 2021, including the COVID-19 pandemic challenge, as well as future developments related to energy policy and technology.
Barkindo highlighted the key role played by the ECB in providing reliable and valuable research output, noting that its work feeds into various aspects of OPEC’s ongoing efforts to support oil market stability.
Referencing the COVID-19 pandemic, the secretary general stressed that the combined efforts of OPEC and non-OPEC oil-producing countries participating in the DoC, in addition to other positive factors, have provided support for the recovery process throughout the pandemic.
Barkindo emphasised that overall, despite some occasional bumps, the high levels of volatility the industry suffered in 2020 had not resurfaced, assuring members that he believed the industry was on the right path.
However, to fully recover from the pandemic, he stressed that there needs to be a worldwide effort to ensure that developing countries receive the vaccinations, insisting that only then will there be a full-fledged economic recovery, across all of the world’s regions.
According to him, during the meeting, energy policies, climate change, sustainable development, the energy transition and energy poverty as well as the future of the energy world in the decades to come will be discussed.
“We all agree that the world needs to reduce emissions. But there are many ways to accomplish this. We believe the oil and gas industry is uniquely positioned and has an important role to play in providing efficient and high tech solutions that will move us towards a lower carbon future,” he added.