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The head of the Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday that despite the global commitment to transition to green energy, it is “wrong” to stop new investment in fossil fuels because he warned that oil demand will continue to accelerate growth in the next few years. The economy rebounded from the COVID-19 pandemic.
OPEC expects oil demand to return to pre-pandemic levels next year and continue to soar by 1.7 million barrels per day (bpd) in 2023.
Secretary-General Mohamed Barkindo warned when introducing the cartel’s annual world oil outlook at the OPEC headquarters in Vienna that funding is essential to keep up with growing demand.
“If the necessary investment is not met, it may not only have an impact on the current natural gas development in Europe and other parts of the world, [but] It leaves long-term scars, not only for producers but also for consumers,” Barkindo said.
He said that this year’s oil outflow shows that between now and 2045, the upstream, midstream and downstream sectors will require 11.8 trillion U.S. dollars of investment. Oil will maintain its number one position in the global energy structure, and by 2045 it will meet 28% of global energy demand.
Last year, when the coronavirus pandemic destroyed global business activities, global oil demand fell sharply by 9.3 million barrels per day. With the economic recovery, the oil market is rejuvenating.
The global benchmark Brent crude oil surged to more than US$80 per barrel on Tuesday, the highest level in three years.
But the sharp rise in energy prices is affecting the global economy, leading to rising costs for producers, and these costs are usually passed on to consumers.
Barkindo warned that there are a lot of pressures and conflicts on energy, affordability, energy security, and reduction of emissions that require the attention of policymakers.
“Focusing on one of the issues and ignoring the others may lead to unintended consequences, such as the market distortions and price fluctuations we are witnessing today. This has been obvious in recent weeks, and it has become more obvious in recent days,” he said.
OPEC predicts that oil demand in 2026 will be 14 million barrels per day higher than 2020 levels-underdeveloped economies are driving the lion’s share of this growth.
However, long-term oil prospects require a significant slowdown. By 2026, total demand will reach 104.4 million barrels per day, and by 2045, it will only climb to 108 million barrels per day.
Natural gas will see the greatest growth, partly due to higher urbanization rates, industrial demand and its competitiveness as a clean power alternative to coal.
Coal is the only source of energy that OPEC predicts that demand will fall.
transportation
Barkindo said that by sector, transportation leads the demand for oil, followed by aviation and petrochemicals.
Although travel and mobility restrictions caused by the pandemic have severely hit the transportation industry, the long-term outlook remains positive. The expansion potential of passenger and commercial fleets is huge, especially in developing countries.
OPEC stated that the expansion potential of the aviation industry is huge, especially in developing regions. [File: Kai Pfaffenbach/Reuters]“In the long run, [with] Strong GDP [gross domestic product] The growth of developing countries, expanding populations and a larger middle class, I expect this will lead to [the] The number of flights,” Barkindo said.
Speaking of electric vehicles, he said that by 2045, the number of such cars on the road will be close to 500 million, which will account for nearly 20% of the global fleet by then. By 2045, natural gas vehicles are also expected to increase by more than 80 million.
However, it is expected that by 2045, internal combustion engine vehicles will maintain the largest market share, exceeding 76%. The head of OPEC stated that the oil demand of the road transport sector is expected to remain at a level of about 4 to 6 million barrels per day after 2025. .
Non-OPEC liquid
He said that on the supply side, non-OPEC liquid supplies will continue to lead the recovery. Non-OPEC oil, that is, the oil produced by countries outside the OPEC alliance, is expected to increase by 7.5 million barrels per day from the low in 2020, reaching 70.4 million barrels by 2026. Russia, Guyana, Canada and Kazakhstan.
Non-OPEC oil production will peak in the late 2020s, in line with US shale oil, and then slowly decline to 65.5 million barrels per day by 2045.
In the long term, a few sources are expected to lead the growth of non-OPEC countries, such as Brazil, Guyana, Canada, and Russia, while other countries, such as the United States, Norway, and China, are expected to decline.
The coronavirus outbreak last year caused crude oil producing countries to tighten oil supply to boost plummeting prices [File: Andrey Rudakov/Bloomberg]OPEC oil is expected to return to pre-pandemic levels around 2025, and to rise strongly thereafter. In terms of market share, OPEC’s oil production is expected to reach nearly 43 million barrels per day in 2045. This means an increase from 33% in 2020 to 39% in 2045.
Addressing climate change and the energy transition
The United Nations Climate Change Conference (the 26th Conference of the Parties, also known as COP26) is scheduled to be held next month, and governments will undertake the tremendous feat of curbing greenhouse gas emissions.
They have their own jobs. With the explosive growth of the global population and economic expansion, the demand for energy will continue to grow significantly in the next few years.
Barkindo said that although wind and solar energy will achieve the highest growth in the next few years, issues surrounding evolving policies and technologies mean that the long-term energy outlook remains uncertain.
The head of OPEC emphasized that it is important to address climate change and energy poverty in the context of the United Nations Sustainable Development Goals (SDG), especially the seventh energy target, SDG7.United Nations met On Friday’s energy poverty.
Barkindo said that OPEC fully supports multilateral approaches to address climate change and energy transition, and pointed out that the organization has directly participated in the evolution of the United Nations Framework Convention on Climate Change, the Kyoto Protocol and the Paris Agreement.
“There is no doubt that the oil and gas industry can use its role as a powerful innovator to develop cleaner and more effective technological solutions to help reduce emissions, cultivate its resources and expertise, and help usher in our carbon-free future. “He said.
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