The Secretary General of the Organisation of Petroleum Exporting Countries, (OPEC), Mohammed Barkindo has said Oil and gas together are still expected to provide more than half of the world’s energy needs from 2016 to 2040.
He made this statement at the Nigerian International Petroleum Summit, (NIPS) in Abuja on Monday.
According to him, global energy demand is expected to increase by 35 per cent in the reported period adding that the majority of this rising demand will come from developing countries, increasing by almost 24 mb/d, to reach 67 mb/d by 2040.
Speaking further, Barkindo said to meet the projected increase in global oil demand, investments worth an estimated $10.5 trillion will be required. This he says underscores the absolute necessity of a sustainable and stable oil market, conducive to encouraging the type of long-cycle investments necessary to prevent supply gaps in the future.
He described the Declaration of Cooperation as one of the most innovative enterprises ever known in the history of oil which he said was as a response “to an unprecedented market turbulence which had a devastating effect on our industry.
“We should note at this point, that price cycles are not new in the history of oil: indeed, in its research on price cycles, OPEC has identified six since the early 1970s.
“This current price cycle should be considered unique for several reasons. Firstly, it is the most overwhelmingly supply-driven of all the cycles we assessed in this exercise. Secondly, the magnitude of the price drop is the highest in real terms.
“Thirdly, the recent oil price drop has been considerably sharper than the decline in prices for other commodities, which is in stark contrast to the oil price collapse of 1985-1986, when all commodity prices declined in a similarly steep manner. And finally, the downward cycle had equally negative ramifications for consumer countries in the OECD.
“The multiplier effects of this cycle were reflected in the deflationary pressures experienced by these countries.
“From 2014 to 2016, world oil supply growth outpaced that of oil demand, with world oil supply growing by 5.5 mb/d, while world oil demand increased by 4.1 mb/d.
“By July 2016, OECD commercial stock levels reached a record high of about 386 mb over the five-year average. The OPEC Reference Basket price fell by an extraordinary 80 per cent between June 2014 and January 2016.
“Investments were choked-off, with exploration and production spending falling by an enormous 27 per cent in both 2015 and 2016. Additionally, nearly one trillion dollars in investments were frozen or discontinued, and many thousands of high quality jobs were lost. A record number of companies in our industry filed for bankruptcy,” he said.
He therefore said OPEC remains fully engaged and supportive of the Paris Agreement.
In his words, “We firmly believe that a global consensus from the multilateral process remains the best and most inclusive way for all nations to collectively counter climate change in a fair and equitable manner.
“The world will continue to need all energy sources, especially for the 1.1 billion people in developing countries that have no access to electricity and the 2.3 billion deprived of commercial energy.
“Therefore, rather than discriminate against any energy source, it is vital that we collectively develop and adopt technologies, as well as all-inclusive energy policies, that transform the environmental credentials of all energies, including the 1.5 trillion barrels of proven reserves which currently exist,” he added.