By Mohammad Sanusi Barkindo

It was with great sadness that we had to postpone our in-person participation at the 23rd World Petroleum Congress (WPC). This was due to the ongoing challenges related to the COVID-19 pandemic with a recently reintroduced lockdown in the OPEC Secretariat’s home country of Austria, as well as the emergence of the Omicron variant that has further complicated conditions.

The WPC is an extremely important global petroleum event, one I have attended on many previous occasions, and this year’s host Houston, the energy capital of the world, gives it even more pre-eminence.
When I am in Houston I always feel at home, with many oil industry executives, innovators and friends having their offices and homes there. I look forward to returning to Houston in the not too distant future.

It is also a great pleasure to share a platform again with my good friend, Joe McMonigle, Secretary General of the International Energy Forum. Joe has years of rich experience working on energy-related issues, both in the public and private sectors, and his views and thoughts are always welcome in any debate.
The topic of this session is – ‘Energy Transition: Scenarios for the Future’. It is very apt following on from the recent COP26 meeting in Glasgow, Scotland.
The COP26 negotiations were tense at times, but in the end, all Parties reiterated their commitment to the implementation and full operationalization of the Paris Agreement.

This was a positive step, giving the pressing need to reduce global emissions, alleviate energy poverty, counter the impacts of the COVID-19 pandemic and find a sustainable way forward that leaves no one behind.

However, as we all know the public discourse around energy, climate and sustainable development continues to be extremely emotive. This was evident in Glasgow, with some voices all but excluded, including many from our own petroleum industry.

At times, the narrative around the energy transition has been overtaken by emotional outbursts, with rational discussions based on facts, hard data and science, taking a back seat.

The parameters of the public discourse seem reduced to the question: are you for, or against fossil fuels? It is perhaps the ultimate false dichotomy.

It erroneously constrains what options are available. It should not be a question about ‘one or the other’. The complexity of the challenge calls for an inclusive approach; not the pursuit of a single ‘one size fits all’ panacea.

The challenges before us are enormous, and we have seen recently that the strains and conflicts related to energy affordability, energy security and the need to reduce emissions require a delicate balancing act, comprehensive and sustainable solutions, and with all voices heard, and listened to.

Focusing on only one of these issues, while ignoring the others, can lead to unintended consequences, such as market distortions, heightened price volatility and energy shortfalls.

Climate change and energy poverty are two sides of the same coin. We need to ensure energy is affordable for all; we need to transition to a more inclusive, fair and equitable world in which every person has access to energy as referenced in UN Sustainable Development Goal 7; and we need to reduce emissions.

It is an energy sustainability trilemma, with each piece having to move in unison.
What is clear is that the world will need more energy in the future. OPEC’s recently released World Oil Outlook (WOO) 2021 sees global energy demand expanding by 28% by 2045. It underlines the need to have a holistic view of the energy sector, and appreciate what each energy source can offer.

For oil and gas, there are some who believe that these industries should not be part of the energy future, that they should be consigned to the ‘dustbin of history’, and that the future is one that can be dominated by renewables and electric vehicles.

It is important to state clearly that the science does not tell us this, and the statistics related to the blight of energy poverty do not tell us this either.
Renewables are coming of age, with wind and solar expanding quickly, but – even by 2045 – in our WOO they are only estimated to make up around 24% of the global energy mix. Oil and gas combined are forecast to still supply over 50% of the world’s energy needs by 2045, with oil at around 28% and gas at just over 24%.

It is important to stress that many OPEC Member Countries have great solar and wind resources, and huge investments are being made in this field. OPEC welcomes the development of renewables, which will be vital to help quench the world’s growing thirst for energy.

In terms of electric vehicles, there is no doubt that they will continue to see expansion in the transportation sector. In our WOO, the share of electric vehicles in the total road transportation fleet is projected to expand to close to 20% in 2045. We support their development in a sustainable manner.

However, for many of the world’s population, electric vehicles do not offer a viable alternative to the internal combustion engine, primarily due to cost. There is also debate about how environmentally friendly they are considering their build process, especially the required batteries, mining for minerals and metals, and the sourcing of the vehicles’ electricity.

The key point to make is that the challenge of tackling emissions has many paths. It is not just one path for all, whether that be a country or an industry.
We fully believe that the oil and gas industries can be part of the solution to tackling climate change, and evolving the energy transition.

The history of Houston and the oil and gas industry is one of innovation. Of providing solutions to the most intractable of challenges.

I have no doubt the resources and expertise of our industry can be harnessed again to help develop cleaner and more efficient technological solutions, contributing to a reduction of emissions as part of unlocking a low-emissions future.
For example, carbon capture utilization and storage, blue hydrogen and others, can be utilized, as well as the promotion of the Circular Carbon Economy, to improve overall environmental performance.
We are ready, willing and able to play a key role. As we have seen through the prism of recent events, any talk of the oil and gas industries being consigned to the past and halting new investments in oil and gas is misguided.
On the investment issue, let me stress that this year’s WOO shows that investments of $11.8 trillion will be required between now and 2045 in the upstream, midstream and downstream oil sectors.

To place this in some further context, upstream capital expenditure fell by around 30% in 2020 as a result of the impact of the pandemic, and this follows drops of 27% in both 2015 and 2016. Investments have not recovered since a global level of $700 billion was witnessed in 2014, and they were at only half this level last year.

Let me stress that the return of investments is a core objective of the Declaration of Cooperation between OPEC and non-OPEC producers, which has done so much to return balance and stability to the market since the onset of the pandemic in early 2020.

If the necessary investments are not made it could have knock-on implications, and leave long-term scars, particularly for security of supply, affecting not only producers, but consumers too.

Let me also stress how important the US will be to our energy future.
The US is a vital cog in the global oil and energy markets, as both a major producer and consumer.

We welcomed the decision of the Biden administration to return to the Paris Agreement, and take the lead at COP26. The energy transition and the global conversation around it would be incomplete without the US at the head of the multilateral table.

We also welcome the role of US oil and gas producers. They are a key part of addressing the energy transition, as are all oil and gas producers around the world.

It is OPEC’s deeply held conviction that dialogue and action on the energy transition should be inclusive and broad to try and evolve it in the least disruptive manner.

We need to think and act carefully about what an energy transition actually means; and we all need to follow the right paths.
The current energy market turmoil seen across the world in recent months is perhaps an early insight into some of the issues we are dealing with, and what can occur if we do not see the bigger picture and the interwoven complexities.

We need to connect all aspects of the energy sustainability trilemma. Our energy future is not about ‘Them’ or ‘Us’. It has to be about ‘We’. Working together we can build an energy future worthy of future generations.

– Being the Opening remarks delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the ‘Energy Transition: Scenarios for the Future’ session of the 23rd World Petroleum Congress held in Houston, United States, 8 December 2021.