OPEC Secretary-General Haitham Al Ghais talks during the Abu Dhabi International Petroleum Exhibition Conference in Abu Dhabi, United Arab Emirates, Monday, Oct. 31, 2022. (AP Photo/Kamran Jebreili)
OPEC is honoured to participate in COP27 in Egypt at such a critical juncture for the UN Climate Change Conference.
With the COP returning to Africa, and with Egypt a country that has an array of energy resources, including hydrocarbons, the event is a unique opportunity for the world to come together and ensure that all voices are heard.
Egypt has a long history of promoting dialogue and cooperation. In fact, it played a central role in the establishment of OPEC. In April 1959, Cairo hosted the first Arab Petroleum Congress and it was on the sidelines of this event that the five founding fathers of OPEC forged a “gentlemen’s agreement”, or what has become known as the “Maadi Pact”. It was here where the idea of OPEC was incubated, before the organisation came into the world in Baghdad in September 1960.
Today, the challenges around energy, climate, and sustainable development are enormous and this means the parameters of the discourse need to be inclusive. We need every voice at the table.
As the energy affordability, security, and sustainability challenges we have faced this past year have shown, we cannot return to a world that is limited by the question “are you for, or against fossil fuels?” It constrains the available options.
With populations and economies growing, the world will need more energy in the decades to come. In our recently released World Oil Outlook, global energy demand expands by 23 per cent to 2045. Meeting this growth, while also lowering global emissions in line with the Paris Agreement, requires a broad energy mix and unprecedented investment and collaboration.
For the oil industry alone, we see global investment requirements totalling $12.1 trillion between now and 2045. This is equal to over $500 billion each year.
Recent annual levels have been significantly below this, due to industry downturns, the pandemic, and the increasing focus on environmental, social and governance issues.
Looking at energy holistically, the sustainability of the global system is at stake.
All industry policymakers and stakeholders need to work together to ensure a long-term investment-friendly climate, with sufficient finance available. One that works for producers and consumers, and developed and developing countries.
We have heard appeals for oil and gas producing countries to play a key role in ensuring stable and sustainable global energy supplies. At the same time, however, we have also heard calls from industrialised countries to end financing in fossil fuel projects.
Clear and transparent signals of the continuing importance of oil to our energy future are required, particularly given the industry’s high upfront capital costs and long lead times.
In fact, for global oil production to just stand still requires massive investment. Average annual industry decline rates of around five per cent means we need to add five million barrels a day every year to just keep current production levels.
We need a realistic view of the investment challenges and understand what each energy can offer in an orderly and inclusive energy transition. If the world does not get it right, it could sow the seeds of future energy crises.
OPEC member countries are ready, willing, and able to play a key role in helping provide energy to the world and in reducing emissions. I heard this very clearly at ADIPEC in the UAE earlier in November, a country that will follow Egypt and host COP28 in 2023.
We are investing in upstream and downstream capacity. We are mobilising cleaner technologies as well as our vast pool of human expertise to help decarbonise the industry. We are making major investments in renewables and hydrogen capacity.
History has shown us that energy transitions evolve slowly, take many decades, and have many paths. We need to remember the sad reality that over 700 million people still have no access to electricity and 2.4 billion still use inefficient and polluting systems.
What can be viewed in the current market turmoil is what can occur if we do not see energy’s interwoven complexities. We need to work with each other, and not against each other.
COP27 has been labelled “The Implementation COP” and we welcome calls from the host to ensure that all stakeholders effectively engage in this critical global conversation, with a strong focus on transition.
We are supportive of our hosts in making the conference an impactful event. We hope the future sees investments and finance focusing on an “all-peoples, all-fuels, and all-technologies” approach. OPEC subscribes to a sustainable path forward, one that works for all.
*A version of this article appears in print in the 3 November, 2022 edition of Al-Ahram Weekly.