The oil industry must increase its investment in capacity and new production so that the oil market can avoid high volatility in the future, OPEC Secretary General Haitham Al Ghais said this week.
Al Ghais stressed the importance of increasing investments in the oil sector in an exclusive interview with the Emirates News Agency (WAM) on the sidelines of the ADIPEC energy conference in Abu Dhabi.
The significant drop in investment in the oil industry, which began with the 2015 price crash and then again in 2020 with the first wave of COVID, is exacerbating volatility in the oil market, the OPEC secretary general said.
Prior to 2016, investment in the oil industry exceeded $500 billion a year but has since declined, leading to a decline in production capacity, Al Ghais told WAM.
Unused capacity globally is currently very low and in the hands of two of OPEC’s top producers, Saudi Arabia and the United Arab Emirates (UAE).
OPEC’s Al Ghais reiterated recent comments from Saudi Arabia and other major producers who said the current energy crisis had been brewing for years with underinvestment in oil and gas.
Years of underinvestment in oil and gas production are the main cause of the current energy crisis, and when the global economy rebounds from the current downturn, the small amount of oil production capacity available will be wiped out, said the Saudi Aramco chief executive Amin Nasser in September. . Investments in oil and gas have more than halved between 2014 and 2021, Nasser said, adding that “the increases this year are too small, too late, too short-term.”
“These are the real causes of this state of energy insecurity: underinvestment in oil and gas; alternatives not ready; and no backup plan,” the Saudi Aramco CEO said in September.
This week at the ADIPEC conference, OPEC launched the 2022 edition of its World Oil Outlook, which states that “all forms of energy will be needed to meet future energy needs” and that oil is expected to retain the largest share of the energy mix. until 2045, then representing a share of nearly 29%. The OPEC outlook also showed that the global oil sector will need cumulative investments of $12.1 trillion upstream, midstream and downstream through 2045, which equates to more than $500 billion per year. year.
By Charles Kennedy for Oilprice.com
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