The global oil sector needs a cumulative investment of $11.8 trillion in the upstream, midstream and downstream through to 2045 to meet the growth in energy demand, Muhammad Barkindo, the secretary-general of the Organisation of Petroleum Exporting Countries (OPEC) has said.
According to Barkindo, OPEC projects that total primary energy demand will expand by 28 percent in the period to 2045. He said oil was expected to retain the largest share of the energy mix, accounting for over a 28 percent share in 2045, followed by gas at around 24 percent.
“In other words, oil and gas together will continue to supply more than half of the world’s energy needs for many decades,” Barkindo said at the ongoing 2021 oil and gas conference in Abuja.
According to him, these hydrocarbons are especially vital to the energy mix in regions like Africa, which he noted, would see a massive population shift and economic growth in the coming years. “These developments increase the urgency of eradicating energy poverty,” he added.
The secretary-general decried that the oil sector was under siege, adding that years of underinvestment in the oil sector help explain the current market tightness and razor-thin spare capacity margins.
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According to him, “In OPEC’s 62-year history, spare capacity has never been as low as it is today, and this takes into account periods of war, natural disaster and other market shocks. If this trend continues, it could haunt us in the future,”
“OPEC’s 2022 annual statistical Bulletin, which was published last week, helps shed light on the situation. Worldwide refinery capacity fell by more than 330,000 barrels per calendar day year-on-year in 2020 and remained below pre-pandemic levels last year despite the robust global economic rebound. The Middle East, China, as well as Africa and India, recorded refining capacity additions,” he added.
“However, refinery capacity in the OECD declined for the third consecutive year in 2021. Comparing the pre-pandemic year of 2019 to 2021, OECD refining capacity fell by a significant 1.5 million barrels per calendar day or 3.3 percent. Given the global refining squeeze at the moment,” he said.
Barkindo further regretted that the OPEC was seeing global energy cooperation becoming more fragmented. He said new regional alignments were also threatening to reverse years of progress towards creating a more stable and interconnected energy system.
“We cannot afford to allow multilateral energy cooperation and global energy security become collateral damage of geopolitics,” he added.
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