*Expresses concerns about Africa’s 125bn bbls, 16TSCM of proven oil & gas reserves
Secretary-General of the Organisation of Petroleum Exporting Countries (OPEC), Mohammad Sanusi Barkindo, brought to the fore the need for aggressive efforts for a switch over to renewable energies globally especially in oil producing and dependent countries such as Nigeria.
The OPEC Scribe said the oil industry is currently at an inflexion point and has never before faced so many challenges across multiple fronts in its long history. The industry is under siege and under attack in the courts as over 700 litigation cases against oil companies are ongoing worldwide.
He said Environmental NGOs, investors and even some corporate boards are pressuring oil companies and governments to pursue aggressive policies and initiatives that could, in the end, be more disruptive than productive for the global energy industry because of its operational consequences in terms environmental pollution and degradation, among others.
Barkindo disclosed this in his opening remarks at a panel session on Monday at the ongoing 5th Nigeria International Energy Summit in Abuja, adding that ongoing greater attention on the energy transition is warranted, given 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.
He said: “We have even heard radical calls for investments in oil and gas to be discontinued. We need to be cognizant of how oil and gas industry investments are being impacted by Environmental Social Governance (ESG) requirements and the climate disclosure drive from the financial community. We are concerned about the ESG footprint and stranded asset risk of the industry. The environmental aspect of ESG is perhaps outweighing the need to address the social and development issues.
“Consider the fact that our great continent, Africa, is still relatively unexplored, with approximately 125 billion barrels of proven oil reserves and 16 trillion standard cubic metres of natural gas, it would be a tragedy of unimaginable proportions if, despite billions of dollars being poured into investments for these resources, this went to waste as stranded assets.
“Climate activists have seized the momentum and are dictating the terms and pace of the energy transition. The parameters of the public discourse often seem reduced to the question: are you for, or against fossil fuels? It is perhaps the ultimate false dichotomy. It erroneously limits what options are available. It should not be a question about ‘one or the other’. 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 and price volatility. This has been evident over the past few months in Europe, and now across the world. This narrative does not correlate with the future trajectory of the world’s energy needs.
“According to OPEC’s World Oil Outlook, our flagship publication which looks at the longer term projections for the industry, the global economy in 2045 will be more than double the size it was in 2020, from around $125 trillion in 2020 to almost $270 trillion in 2045, based on 2017 purchasing power parity (2017 ppp). The global population is expected to reach 9.5 billion people by 2045, an increase of 20%.
“As a result of these phenomenal demographic and economic changes, global energy demand is set to increase from 275 million barrels of oil equivalent a day in 2020 to 352 million barrels of oil equivalent (mboe/d) by 2045.
“No single source of energy can meet this demand growth alone. Demand for ‘Other renewables’ – combining mainly solar, wind and geothermal energy- represents the single largest incremental contribution to the future energy mix, rising from 6.8 mboe/d in 2020 to close to 36.6 mboe/d in 2045. Moreover, it is also the fastest growing energy source with its share in the global primary energy mix. This means renewables’ share of the energy mix is projected to rise from 2.5% in 2020 to 10% in 2045.
“Clearly, multiple sources of energy are required to meet this rise in demand. Oil is forecast to remain the fuel with the largest share of the global energy mix until 2045. Primary oil demand is set to increase in the long-term from 83 mboe/d in 2020 to 99 mboe/d in 2045. In 2020, oil accounted for 30% of global energy requirements. By 2045, it is expected to account for approximately 28%. Oil and gas together are still expected to account for morethan 50% in this time horizon.
“We need to ensure energy is accessible and 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.
“The challenge of tackling emissions has many paths, as evidenced by the Intergovernmental Panel on Climate Change, the United Nations Framework Convention of Climate Change (UNFCCC) and the Paris Agreement. It is not just one path for all, whether that be a country or an industry.
“The capacities and national circumstances of developing countries must be taken into account in all actions. In order to not render countries already struggling even more besieged, it is bnecessary to carefully consider the adverse socio-economic impacts on these countries due to mitigation activities, in order to identify remediation measures and share best practices.
“Investments are the life-blood of this industry. Cumulative oil-related investment requirements amount to $11.8 trillion in the 2021-2045 period. Of this, 80%, or $9.2 trillion is in the upstream, with another $1.5 and $1.1 trillion needed in the downstream and midstream, respectively.
“The investment requirements clearly underline that any talk of the oil and gas industries being consigned to the past and of the need to halt new investments in oil and gas is misguided. Any shortfall could have severe consequences, particularly if supply falls and demand does not. We could see crude oil and product shortages, all of which would have an impact on the global economy.
“At OPEC, we believe we need multilateralism at the centre of our energy, climate and sustainable development future. OPEC and our member countries have been directly involved in the evolution of the multilateral UNFCCC, whose core elements, particularly equity, common-but-differentiated responsibilities and national circumstances must remain central to all processes moving forward.
“We are ready, willing and able to play a key role. This is not a race to renewables alone. Rather it is a race to reduce greenhouse gas emissions and in doing so, use energy more efficiently. There is no doubt that the oil and gas industry can foster its resources and expertise and help unlock a low-emissions future, through its role as a powerful innovator in developing clean and more efficient technological solutions to help reduce emissions, for example, carbon capture utilization and storage (CCUS), blue hydrogen and others, as well as in the promotion of the Circular Carbon Economy to improve overall environmental performance.
“Investing in technologies such as blue hydrogen and CCUS while harnessing the ‘reduce, reuse, recycle and remove’ carbon principles are all critical paths towards a sustainable society in Africa. These principles not only minimize the environmental impacts of GHG emissions, but also contribute to achieving socio-economic development and prosperity. Additionally, hydrogen production development could make Africa a net exporter in the global market.
“We must bear in mind that climate change and energy poverty are two sides of the same coin. The unfortunate reality for developing countries is that a staggering 759 million people worldwide did not have access to electricity in 2019, with three out of four of them in Sub-Saharan Africa. Moreover, there were roughly 2.6 billion people or 34% of the global population who did not have access to clean cooking fuels and technologies — and this includes a massive 70% of Africans who have no access, exposing them to high levels of household air pollution. The energy poverty numbers for Africa are stark. And to add in one further number, Africa accounts for less than 3% of global emissions.
“As an industry, we must approach these critical issues together through dialogue and cooperation, ensuring that all voices are heard and all viewpoints are considered. What can be viewed in the current energy market turmoil is what can occur if we do not see the bigger picture. We need to connect all aspects of the energy trilemma. This means working with each other, and not against each other. It is in the interests of each and every one of us to evolve a sustainable energy future that works for all.”
