OPEC boss says world can’t afford to underinvest in oil

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VIENNA — OPEC Secretary General has said consumers should prepare for more energy shortages unless the world increases investment in new oil and gas developments, the cartel’s first forceful response to calls growing to limit these expenses.

In May, the International Energy Agency, an energy watchdog for rich countries, said investment in new fossil fuel supply projects must stop immediately if the world is to reduce emissions. carbon net to zero by 2050. Meanwhile, major oil companies have taken steps to cut emissions and shift to renewable energy sources, under pressure from investors, customers and in some cases , governments and courts.

If all of this translates into less investment in researching and pumping new crude and natural gas fields, the world is at greater risk for the kind of energy price volatility it is currently experiencing, said Mohammed Barkindo. , head of the Organization of the Petroleum Exporting Countries. , in an interview.

“The energy crisis in Europe and in many parts of the world is a wake-up call,” he said, adding: “It all comes down to the issue of investments in the oil and gas industry.

Natural gas prices have skyrocketed amid low inventories in the United States and Europe, while high coal and gas prices and government efforts to reduce electricity use have resulted in power cuts. electricity in China. Global oil prices, meanwhile, have skyrocketed this year and are near their highest levels in three years.

The global energy crisis comes at a time of extraordinary demand, as economies rebound from near-hibernation amid the worst months of the pandemic. Mr Barkindo, however, said past episodes of underinvestment in new fossil fuels and the current pressure to limit new investment even further have exacerbated volatility by squeezing supplies.

OPEC, a group of some of the world’s largest producers, said earlier this week that the world is expected to need $ 11.8 trillion in oil and gas investment through 2045 to meet the growing demand.

In 2020, Mr Barkindo said investment in oil and gas fell 20%. This happened despite the fact that the industry did not fully catch up with a previous period of underinvestment amid low prices between 2015 and 2016. “We need to invest more capital to restart the production cycle,” he said he declared.

“In addition to this contraction, you have the energy transition,” he said, which has increased pressure on governments and oil companies to divert money from oil and gas development to renewable energies. Mr. Barkindo said there had been “a global campaign [against] the oil industry to squeeze out oil and gas investors.

OPEC is due to meet on Monday to decide whether to pump more crude. At the start of the pandemic, the cartel and a group of allied producers led by Russia sharply cut production to stabilize the fall in prices. In recent months, the two groups have worked together to slowly restore this production.

Barkindo’s call for more investment in oil and gas precedes the first major UN climate summit since the Paris agreement in 2015. Governments will meet in November in Glasgow, Scotland, to discuss ways to reduce greenhouse gas emissions. , which most scientists believe helped heat the planet above pre-industrial levels.

Mr Barkindo said recommendations to reduce the risks of investing in oil and gas steered the conversation in Glasgow towards drastic measures that could contribute to soaring prices and exacerbating energy poverty around the world.

“In our parts of the world, energy poverty is endemic,” said Barkindo, from northern Nigeria. “No single source of energy will satisfy the thirst for energy in the developing world,” he said. “We hope Glasgow will bring this issue back to the forefront. It will be necessary to fight against climate and energy poverty.

The goal of the Glasgow summit should be to “contain greenhouse gas emissions, but not exclude any source of energy,” said Barkindo.

Write to Benoit Faucon at [email protected] and Summer Said at [email protected]

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