The Organisation of Petroleum Exporting Countries (OPEC) has reiterated the need to pump more money into the oil sector, stressing that about $12.1 trillion investment is sacrosanct to keep the sector afloat.
Global oil-related investment requirements total $12.1 trillion as of 2022 over the long-term, OPEC said at the African Refiners and Distributors Association (ARDA) Week in Cape Town, South Africa.
Of the fund, OPEC said $9.5 trillion is needed for the upstream, $1.6 trillion for the downstream, and $1 trillion in the midstream, adding that North America represents the bulk of upstream investments for most of the forecast period.
The development is coming at a time when oil companies and investors across the world are slowing down regarding their investment portfolios in fossil fuel.
Despite the push for energy transition, Senior Research Analyst, Energy Studies Department, OPEC, Dr. Haris Aliefendic stated that global oil demand is rising and would increase by close to 13 million barrels per day, rising to 110 mb/d in 2045.
According to him, growth would slow after the medium-term period but oil demand would reach almost 110 mb/d in the long-term.
Aliefendic noted that the largest incremental demand would be India, Asia and Africa.
He noted that global energy demand would also increase by 23 per cent to reach 351 mboe/d in 2045 as renewables would mark the fastest and largest growth.
The rise in demand is pegged on the rising population as the global economy is expected to double.
Aliefendic equally noted that the global Gross Domestic Product would increase by three per cent yearly on average over the period 2021-2045.
“GDP is projected to rise from around $133 trillion in 2021 to almost $270 trillion in 2045 as the global population is to increase by 1.6 billion by 2045. At the same, urbanization and middle-class expansion, particularly in developing countries, will increasingly play a role,” Aliefendic said in a presentation.
The demand for oil would be triggered by aviation, road transportation and petrochemicals will drive future demand growth, OPEC noted.
With projected decline in electricity generation, OPEC said the contribution of aviation and road transportation is affected by recovery from COVID-19 crisis.
Meanwhile, the Chief Executive Officer, Saudi Arabia’s oil giant Saudi Aramco, Amin Nasser had noted that underinvestment in oil and gas could threaten the world’s energy security.
Nasser said: “A persistent underinvestment in oil upstream and even downstream is still there. The latest report from the IEA talks about a demand of 101.7 million barrels – going from 100 million barrels in 2022 to almost two million barrels more with China opening up and the aviation industry.
“There is a lot of potential for growth in aviation and with China opening up and the lack of investment, there is definitely a concern in the mid-to-long term in terms of making sure there is adequate supplies in the market.” He also suggested that while substantial U.S. fuel supplies have supported a fall in oil prices, the slowing of drilling activities could threaten the future supply.”
With mounting global advocacy aimed at halting all-new Final Investment Decisions (FIDs) for fossil fuels, especially oil and gas projects across countries are projected to suffer even as the Ukraine war throws the global community into serious energy crisis.
Source : Guardian