The cartel’s secretary general warns of recent low investment risks price shocks and energy poverty for developing countries
Mohamed Barkindo, head of the Organization of the Petroleum Exporting Countries, said the world is at greater risk of the kind of energy-price volatility that is now at risk of low investment in finding and pumping new reserves of crude and natural gas. is visible. , in an interview.
“The energy crisis in Europe and in many parts of the world is a wake-up call,” he said, “it all comes back to the issue of investment in the oil and gas industry.”
Natural gas prices have soared amid low inventories in the US and Europe, while high coal and gas prices and government efforts to cut electricity use have led to power cuts in China. Meanwhile, global oil prices have soared this year, and are near their highest level in three years.
The global energy crisis comes at a time of extraordinary demand, as economies return to hibernation amid the worst months of the pandemic. Mr Barkindo said, however, that past bouts of lower investment in new fossil fuels, and today’s pressure to curb new investment even more, have exacerbated volatility by reducing supply.
OPEC, a grouping of some of the world’s largest producers, said earlier this week that the world is projected to need $11.8 trillion in oil and gas investment by 2045 to meet rising demand.
In 2020, Mr Barkindo said oil and gas investment fell 20%. This came despite the industry not being fully prepared for the previous period of low investment amid low prices between 2015 and 2016. “We need to invest more in capital to revive the production cycle,” he said.
“On top of that contraction, you have the energy transition,” he said, which has put more pressure on governments and oil companies to divert funding for renewable energy from oil and gas development. Mr Barkindo said there has been “a global campaign”. [against] Oil industry to expel investors from oil and gas. “
OPEC is set to meet on Monday to decide whether to pump more crude. At the start of the pandemic, a group of allied producers led by the cartel and Russia sharply reduced production to stabilize falling prices. In recent months, the two groups have been working together to gradually restore that output.
Mr Barkindo’s call for more oil and gas investment comes ahead of the United Nations’ first major summit on climate 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 agree, may have contributed to the warming of the planet above pre-industrial levels.
Mr Barkindo said recommendations to cut oil and gas investment risk are driving talks in Glasgow towards harsher measures that could contribute to price increases and exacerbate energy poverty around the world.
“In our regions of the world, energy poverty is endemic,” said Mr Barkindo, who hails from northern Nigeria. “No one source of energy will satisfy the thirst for energy in developing countries,” he said. “We hope Glasgow will put this issue back on the front burner. Climate and energy poverty have to be addressed.”
The aim of the Glasgow summit “should be to control greenhouse emissions, but not at the exclusion of any source of energy,” Mr Barkindo said.