Oil and gas 'will continue to account for more than 50% of global energy mix by 2045'

Investment in the sector needs to accelerate to meet growing energy demand, Opec secretary general says

OPEC Secretary-General Mohammad Sanusi Barkindo speaks during the Atlantic Council's Global Energy Forum at the Dubai Expo 2020, in Dubai, United Arab Emirates, Monday, March 28, 2022. The panel streShow more

Oil and gas will account for more than 50 per cent of the global energy mix by 2045 and will continue to play an important role even as the world pivots towards cleaner forms of energy, according to Opec's secretary general.

The role of oil and gas is guaranteed for the foreseeable future, Mohamed Barkindo said, during a panel discussion at the global energy forum on Monday.

“What is required at the moment is to revisit how we explore, produce, refine, distribute and consume hydrocarbons and bring them in line with current realities, especially in terms of sustainability.”

Energy demand will grow as the world population increases 20 per cent by 2045 and access to energy must be taken “seriously” while pursuing goals related to the transition, he said.

Mr Barkindo stressed the importance of boosting investments in the oil and gas sector to meet growing energy demand globally.

Investments dropped by 50 per cent as a result of the impact of the downturn caused by lower oil prices in 2015 and 2016 and “we had not recovered fully before Covid struck in 2020 and we saw in 2020 capital investments contracted by about 30 per cent, unprecedented in history, and stayed flat in 2021”.

The oil and gas sector needs $600 billion worth of investments until 2030 to keep pace with rising demand, Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc, said last year.

“Now our world oil outlook to 2045 shows that the industry will need in the upstream, in the midstream and downstream, about $11.8 trillion in investments to be able to catch up,” Mr Barkindo said.

Total investment in the upstream sector of the oil and gas sector fell 23 per cent below pre-coronavirus levels to $341bn in 2021 while oil demand continued to rise globally, according to a recent report by the International Energy Forum (IEF) and IHS Markit.

“Two years in a row of large and abrupt underinvestment in oil and gas development is a recipe for higher prices and volatility later this decade,” said Joseph McMonigle, secretary general of the IEF.

Oil prices are currently trading higher as global economies recover from the coronavirus pandemic and supply concerns grow as a result of the Russian military offensive in Ukraine.

Brent, the global benchmark for two thirds of oil, was trading at $114.74.26 a barrel at 3.47pm UAE time on Monday while US crude gauge West Texas Intermediate was at $107.83 a barrel.

Mr Barkindo said Opec countries are not “climate deniers” and are “part and parcel” of the conversation related to the energy transition.

“Almost all our member countries have taken measures that we refer to as more rigorous measures in accordance with the core principle of the United Nations Framework Convention on Climate Change.”

Saudi Arabia and the UAE announced initiatives to reach net zero emissions by the middle of the century, as part of their nationally determined contributions in line with the Paris Agreement.

The UAE, the first Arab nation to commit to achieving net zero, aims to reach that milestone by 2050.

Saudi Arabia aims to offset its domestic emissions by 2060, with the kingdom's state-owned energy company, Saudi Aramco, set to achieve net zero by 2050.

Nigeria has also pledged net zero emissions by 2060, while Kuwait is developing a renewables strategy as it diversifies its energy mix, which is heavily reliant on fossil fuels, to include clean sources.