OIL MARKET: IOCs and the NOCs cooperation needed to achieve stability
OPEC plans First Ministerial Roundtable on Energy, Climate and Sustainable Development for oil-producing countries
– By Godswill Odiong

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By Mohammad Sanusi Barkindo

It is a great pleasure to welcome you all to this first-ever Technical Workshop with Energy Companies, which is being held today as a videoconference. We are pleased to welcome national oil company representatives from both OPEC Member Countries, as well as non-OPEC countries participating in the Charter of Cooperation, in addition to participants from the international oil companies. This inaugural event signifies a new milestone in OPEC’s ongoing outreach efforts and builds on our long tradition of promoting partnerships with a wide range of industry stakeholders, including public and private sector organizations and corporations.

OPEC has a long, historical connection to its Member Country national oil companies, and, more recently, we have intensified our efforts to hold informal meetings and exchange information with international oil companies. Today, with this new Workshop, we are bringing the IOCs and the NOCs together to discuss the key issues of the day and to share perspectives. Events such as this underpin our ongoing efforts to promote a lasting stability in the global oil market. Today, we will tackle what I would call the “issue of the moment” – and that is the role of the petroleum industry in the energy transition. We will have the opportunity to hear presentations from our guest speakers and then have discussions at the end of each session.

In Session one, we will look at this issue through eyes of the national oil companies, while Session two will feature viewpoints from the perspective of the international oil companies.

Finally, in Session three, we will hold a roundtable discussion in which we will have the opportunity to discuss the challenges and opportunities that lie ahead for the energy industry as it seeks to successfully navigate the tricky waters that lie ahead. Delegates, colleagues, ladies and gentlemen, Allow me to just share a few comments to set the stage for today’s discussions before we jump into our agenda. In terms of our theme today, from OPEC’s perspective, oil and gas will continue to play an important role in this industry in the medium to long term.

According to this year’s World Oil Outlook, we know that primary energy demand will increase by a very significant 28% in the period to 2045. To meet these rising requirements, all forms of energy will be needed, including oil and gas. In fact, oil will retain the largest share of the energy mix, with a little over 28%, in 2045. To give you an idea as to how well the industry is recovering from last year’s unprecedented drop in demand, we now see global oil demand reaching just over 108 mb/d by 2045, after sinking to a low level of 90.6 mb/d in 2020 due to the severe impacts of the COVID-19 pandemic.

These encouraging indicators tell us that oil and gas still have a vital role to play in meeting the world’s energy needs in the decades to come. However, as many of you are aware, some voices in the industry continue to call for a rapid transition to a carbon-free economy, which even includes some radical calls for an immediate discontinuation of investments in oil and gas. The debates on these issues will be front and center at the upcoming UN Climate Change Conference (COP26) that starts on the 31st of October in Glasgow, Scotland. OPEC and its Member Countries will be actively involved in these meetings to ensure that a balanced and equitable approach is adopted as we seek to mitigate the impacts of climate change. Let me make it clear that OPEC supports the need to reduce emissions, bolster innovation and enhance efficiency, however this cannot come at the cost of depleting industry investment. The fact remains: the world needs energy, energy requires investment and investment relies on companies.

We estimate that cumulative oil-related investment requirements will total approximately $11.8 trillion from 2021 to 2045. Meeting these levels of investment will require major commitments by industry stakeholders across the value chain. Industry investment took a major hit last year, sinking by a massive 30%, due to the adverse impacts of the pandemic. If this trend were to continue, we could see a supply shortfall and the potential for unwanted volatility, risks to energy security and potentially geopolitical ramifications. These are eventualities that no one in this industry wants to see. Thus, stakeholders across this industry must unite to seek out a balanced and fair approach to this issue. Only through increased dialogue and cooperation will be able to make sure that all voices are heard and all viewpoints are considered. The fact is that different countries around the world have diverse needs and varying capabilities, and therefore reducing emissions should have multiple paths.

In the development of any future energy and climate roadmap, we will need to make sure that the core principles of the United Nations Framework Convention on Climate Change are adhered to strictly –namely equity, historical responsibility and the principle of common but differentiated responsibilities and respective capabilities. Delegates, colleagues, ladies and gentlemen, Let me close now with the inspiring words of Dr. Martin Luther King, Jr. who said, and I quote: “Courage is an inner resolution to go forward despite obstacles.” Delegates, ladies and gentlemen, These eloquent words are relevant to our discussions today as we assess how our industry will move forward in the years ahead, meeting the global challenges that await us. Though we will surely experience obstacles along the way, let us advance with courage as − day by day and step by step – we endeavour with one another to achieve our common goals.

– Being the Opening Remarks by Mohammad Sanusi Barkindo, Secretary General, OPEC at the 1st Technical Workshop with Energy Companies, October 11, 2021.

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