The world needs to invest at least $12 trillion in the oil industry by 2045 if it wants to avoid higher oil prices, according to the Secretary General of OPEC.
Speaking to CNN’s Becky Anderson at the ADIPEC energy conference in Abu Dhabi, Haitham Al Ghais warned that the underinvestment in the oil industry was “dangerous”.
He says, “by under investing, we are actually endangering energy security … Without this I think there are serious possibilities that prices, the volatility, will be increasing as demand grows.”
He explained that a growing population and an expanding global economy meant that “there is no way on earth that we can meet this requirement for future energy demand by relying on renewables alone or by relying on hydrogen alone.”
“We have to make sure that the world has enough energy, stable, affordable, reliable, not intermittent sources of energy… we believe that renewables will continue to grow – renewables are part of the requirements for future energy growth and to meet energy demand – but they will not save the day alone,” he continued.
ANDERSON: 100 bucks on the barrel looks likely at this point is that where we’re headed?
AL GHAIS: Well, we don’t forecast prices at OPEC as you know, I can tell you that the factors that may lead to this number you mentioned have been there for some time and continue to be there. Most notably, the under investments that we’ve seen in oil, which has been advocated for by some and I think this is of serious concern if this continues under investment in the oil industry is dangerous. And I believe it is critical that the world gets this right that by under investing, we are actually endangering energy security the world will require at least at least $12 trillion of investments globally for the oil industry from now to the year. the volatility will be increasing as demand grows. You know, we’re talking about a global population within the next 6-7 years. By 2030 we have over half a billion people moving into cities globally. There is no way on earth that we can meet this requirement for future energy demand by relying on renewables alone.
ANDERSON: You just forecast a significant increase in demand for through 2045.And with it, the need for a multi billion dollar, we’re talking about $600 billion a year annually of new investment in the industry to meet your forecast. How do you square that with the International Energy Agency’s forecasts that demand for oil is peaking and will significantly decrease by 2030.
AL GHAIS: That’s a great question. And I think that question should be posed to the IEA themselves who are saying that in less than seven or six years time demand for oil could drop by as much as 25 or 30%.Let me answer it this way by saying that 30 years ago, fossil fuels consumption was 80% globally.30 years on today, it’s still 80 or over 80%.So to come and project that in five or six years with all the challenges that are facing the introduction of electric vehicles, penetration of s globally availability of critical minerals globally and the geopolitical the supply chain logistical issues, the sheer size and volume of electrification required globally to be able to move to an electric world. That’s a monumental lift.
ANDERSON: Let’s talk about what the energy transition looks like to OPEC members and the that these countries will play. So what does that look like with regard clean energy?
AL GHAIS: Well, first of all, we have to ensure the growth. We have to make sure that the world has enough energy, stable, affordable, reliable, not intermittent sources of energy. And that’s what the world has been relying on for all these years, reducing emissions, reducing greenhouse gas emissions. that’s something that is really important for us to see the oil producers are putting actions, actions, their words into real actions.
ANDERSON: What worries you most about the market fundamentals that you see in that present. What’s changing?
AL GHAIS: I would say this even might sometimes keep me awake at night, the key word under investment. And I say if we worry about volatility today, I don’t know what it’s going to be like in the future.
News Sources: Houbara Communications