By Nneka Nwogwugwu
As part of talks on Energy and the Paris Agreement at COP26 in Glasgow, OPEC Secretary General, Mohammad Sanusi Barkindo has urged that $12 trillion investment will be required in the upstream, midstream and downstream between now and 2045.
He added in His opening remarks at the 2nd High-Level Meeting of the OPEC-GECF Energy Dialogue that around 80% or $9.2 trillion, will be needed in the upstream alone.
In four days, the UN COP26 climate talks are scheduled to begin in Glasgow.
In his remarks he further said, “Let me stress here that OPEC and all our Member Countries fully support a multilateral approach to addressing climate change and the energy transition. We are fully on board when it comes to achieving the objectives of the Paris Agreement as mapped out in painstaking negotiations in 2015.
“Unfortunately, the energy conversation taking place in the lead-up to Glasgow has become dominated by emotions and rhetoric rather than data and science. Energy stability and sustainability cannot be built on soundbites and headlines alone.
“As all of us here know, the objective consensus of the leading energy outlooks is that our world will need a broad portfolio of fuel choices to support the post-pandemic recovery and, in the longer term, meet the needs expanding populations and economies. Our OPEC outlook expects global primary energy demand to grow by 28% between 2020 and 2045.
“In addition, our projections show that nearly all energy sources will grow in the coming years, led by renewables, which will rise from a global fuel share of around 2% in 2020 to over 10% by 2045. After renewables, gas sees the second highest growth.
“In 2045, oil and gas together will continue to provide more than half of the world’s energy needs – with oil at 28% and gas around 24%. These two fuels will be the heavy-lifters of our world’s economy and energy system for the foreseeable future – supplying power and heat to homes; driving industrial machinery; keeping the world moving in the air, on land and at sea; and providing the feedstock to meet the rising demand for petrochemicals.
“Given these expectations, our industry will continue to need predictable capital to juggle the demands for more energy and more progress on meeting global climate goals. Throughout OPEC’s 61-year history, there have 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% last year, while exploration and production spending fell by 27% in both 2015 and 2016.
“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.
“Organizations like OPEC and GECF continue to work hand-in-hand to ensure that we remain in a strong position to provide secure, stable and sustainable supplies of energy.”
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