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The Organisation of the Petroleum Exporting Countries (OPEC) has assessed the damages caused by the COVID-19 pandemic and submitted that the global oil industry would need cumulative investments of $11.8 trillion in the upstream, midstream and downstream through to 2045 to meet expectations for significant growth in energy demand.
The Secretary General of OPEC, Mohammed Sanusi Barkindo, made the disclosure in Abuja on Tuesday, at the opening of the 2022 Nigeria Oil and Gas Conference (NOG).
With regard to demand, there is only one direction, and that is up. In fact, OPEC projects that total primary energy demand will expand by a robust 28 percent in the period to 2045. Oil is expected to retain the largest share of the energy mix, accounting for just over a 28 percent share in 2045, followed by gas at around 24 percent. In other words, oil and gas together will continue to supply more than half of the world’s energy needs for many decades. These hydrocarbons are especially vital to the energy mix in regions like Africa, which will see massive population shifts and economic growth in the coming years. These developments increase the urgency of eradicating energy poverty. The impacts of the two major market cycles are manifesting themselves in real time.
Years of underinvestment in the oil sector help explain the current market tightness and razor-thin spare capacity margins.
In OPEC’s 62-year history, spare capacity has never been as low as it is today, and this takes into account periods of war, natural disaster and other market shocks. If this trend continues, it could haunt us in the future.
We could, however, unlock resources and strengthen capacity if the oil produced by the Islamic Republic of Iran and Venezuela were allowed to return to the market.
