OPEC

By Uzair Adam

The Organization of Petroleum Exporting Countries (OPEC) has extended its deepest gratitude to the Federal Government of Nigeria as it celebrates its 64th anniversary.

Speaking on the occasion, the OPEC Secretary-General Haitham Al Ghais acknowledged the significant role Nigeria has played in the organization since its membership began in 1971.

He commended Nigeria for its unwavering support in maintaining a stable and balanced global oil market.

Reflecting on the historic meeting in Baghdad 64 years ago, Al Ghais emphasized the foundational agreement signed by the five original members: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.

He stated that, “This event marked the inception of OPEC and a new era of international energy collaboration.”

Al Ghais recognized the leadership of Nigerian officials, including President Bola Ahmed Tinubu, Minister of State for Petroleum Resources Heineken Lokpobiri, Ambassador Gabriel Tanimu Aduda, and National Representative Mele Kyari.

He also highlighted the contributions of all OPEC member countries, past and present, including heads of state, ministers, governors, and the dedicated staff at the Secretariat.

As September 14, designated as OPEC Day, is observed, Al Ghais called for reflection on OPEC’s journey and anticipation of its future prospects.

He expressed confidence that the organization’s most significant achievements are yet to come and encouraged continued participation in shaping its future.

The message concluded with a heartfelt wish for a happy OPEC Day to all members and partners.

By Haitham Al Ghais 

In the 1990s and 2000s, the world regularly saw column inches devoted to the theory of peak oil supply, amplified by voices like Colin Campbell and Matthew Simmons. Decades later, however, it has still not come to pass, as enhanced economics and constant improvement in technology have helped lower costs and open up new frontiers to expand the resource base.

The past decade or so has witnessed a shift to talk of peak oil demand, with some forecasters increasingly pushing theoretical scenarios that have decided before any data is analysed that oil should not be part of a sustainable energy future.

This is evident in some net zero scenarios, with suggestions that oil demand will peak before 2030 or, more dramatically, that oil demand will drop by more than 25% by 2030 and calls to stop investing in new oil projects. 

This narrative was repeated only yesterday when the IEA published its Oil 2024 report, which once again stated that oil demand would peak before 2030. It is a dangerous commentary, especially for consumers, and will only lead to energy volatility on a potentially unprecedented scale.

We have also heard similar narratives before, ones that have proven to be wrong. The IEA suggested that gasoline demand had peaked in 2019, but gasoline consumption hit record levels in 2023 and continues to rise this year. It also stated that coal demand had peaked in 2014, but today, coal consumption continues to hit record levels. 

Many net zero futures focus almost exclusively on replacing hydrocarbons, which make up more than 80% of the global energy mix today. Rather than adding new energy sources to the mix, the focus is on substituting energy sources, which flies in the face of the history of supplying energy to the world. The emphasis is on rhetoric over reality and constraint over consumer choice.

Today, wind and solar supply around 4% of global energy, with electric vehicles (EVs) having a total global penetration rate of between 2% and 3%, even though the world has invested over $9.5 trillion in ‘transitioning’ over the past two decades. OPEC welcomes all the progress made in renewables and EVs, but it is nowhere near close enough to replace 80% of the energy mix. Furthermore, electricity grids, battery manufacturing capacity and access to critical minerals remain major challenges. 

We should also remember that the development of renewables and EVs requires some oil-related products. Their future expansion will increase oil demand.

Of course, we all want to lower emissions, but at the same time, we all need ample, reliable and affordable supplies of energy. The two cannot be decoupled. Instead, our energy futures must focus on the full picture and not on a partial, incomplete one. In this respect, three key facts are worth bearing in mind. 

Firstly, future energy and oil demand growth primarily lies within the non-OECD developing world, driven by increasing populations, an expanding middle class and growing economies. From now until 2045, non-OECD oil demand is set to expand by over 25 million barrels a day (mb/d), with China and India contributing over 10 mb/d alone.

We should also remember that billions of people in the developing world still lack access to modern energy services. For these people, their energy future is not about net zero, deciding on the purchase of an electric vehicle, or ruminating over the costs and benefits of energy sources. Instead, it is about achieving the energy basics that the developed world takes for granted, such as being able to turn on a light, cook on a clean stove or have motorised transport to move to and from work or school.

Secondly, oil demand continues to increase. At OPEC, we see oil demand growth of 4 mb/d over the two years of 2024 and 2025, with other forecasters also seeing an expansion of over 3 mb/d. Even the IEA sees growth of 2 mb/d over this period, followed by growth of 0.8 mb/d in 2026. It then dramatically drops off a cliff to almost no growth in the next four years through 2030. 

This is an unrealistic scenario, one that would negatively impact economies across the world. It is simply a continuation of the IEA’s anti-oil narrative. Given the real trends we see today, we do not see peak oil demand by the end of the decade.

Thirdly, many parts of the world are witnessing consumer pushback as populations comprehend the implications of ambitious and unrealistic net zero policy agendas. This, in turn, is prompting policymakers to re-evaluate their approaches to future energy pathways, for example, in the UK, with the government recently supporting new oil and gas licenses. 

These shifts, alongside developments in the economic landscape, have seen OPEC revise its oil demand expectations upwards to 116 mb/d by 2045, and there is potential for this level to be even higher. We do not foresee a peak in oil demand in our long-term forecast.

On the supply side, technological improvements are allowing us to continually add resources to the base to help meet demand growth. There are clearly enough resources for this century and beyond, with the world’s proven crude oil reserves standing at over 1.55 trillion barrels. Moreover, technologies are also enabling us to take huge strides in reducing emissions, as exemplified by the availability of cleaner fuels, much-improved efficiencies and technologies such as carbon capture, utilisation and storage, carbon dioxide removal and direct air capture.

Everyone is free to have an opinion, but it is important that this is based on the realities we see before us today. There is a clear need to prioritise energy security, utilise all available energies, deliver energy affordability, enhance sustainability, reduce emissions, and not limit our energy options in the face of expanding demand.

Oil can deliver on all those fronts, and as we look to the future, its versatility ensures that we do not see peak oil demand on the horizon. Just as peak oil supply has never transpired, predictions of peak oil demand are following a similar trend.

Against this backdrop, stakeholders need to recognise the need for continued oil industry investment today, tomorrow, and many decades into the future, given the products derived from crude oil are essential for our daily lives. Those who dismiss this reality are sowing the seeds for future energy shortfalls and increased volatility and opening the door to a world where the gap between the ‘energy haves’ and ‘energy have-nots’ grows even further. 

Haitham Al Ghais became OPEC Secretary General in 2022. He served as Kuwait’s OPEC governor from 2017–21 and was the inaugural chairman of the OPEC+ Joint Technical Committee in 2017. Al Ghais was already an oil and gas industry veteran, having held senior positions in key OPEC and OPEC+ bodies and committees, as well as at the Kuwait Petroleum Corporation.

By Haitham Al Ghais 

The energy transition as a concept is itself in need of a transition. 

We must move beyond the blinkered view that this is about substituting energy sources, that hydrocarbons should be consigned to the past and that recent real concerns expressed by energy consumers around the world on current transition strategies are temporary blips.

In recent years, there has been much discussion among policymakers of the International Energy Agency’s prescriptive “Net Zero by 2050” scenario. Many ambitious proposals for net-zero policies have leveraged this scenario, but there is evidence that some of these policies are now being pulled back and reconsidered.

There is a refocusing on the daily energy realities lived by billions of people. Yes, we all want energy with lower emissions—that is a given. But we also want to ensure reliable and affordable energy, enable economic growth, and enhance energy accessibility.

Ongoing Re-Evaluations

There are a number of reasons for these ongoing re-evaluations.

Firstly, technologies like solar, wind and electric vehicles (EVs) are not replacing hydrocarbons at any real scale. While these alternatives will play a role moving forward, the share of hydrocarbons in today’s global energy mix is over 80%, similar to the level 30 years ago. Wind and solar combined make up under 4% of the world’s energy, and global EV penetration is between 2%-3%. This is despite the fact that $9.5 trillion has been invested in “transitioning” over the past two decades.

The course of history has shown that energy transitions take centuries to evolve and have been about energy additions, not energy subtractions. Previous transitions were technology-driven, with policy following suit. This current transition has, to date, been policy-driven, with the hope that technology will catch up.

Cost and Competitiveness Challenges

Secondly, the costs and competitiveness of many of these alternatives remain a challenge. Renewable costs have been reduced, but when considering intermittency issues, the levelized cost of “total” electricity from solar is more than seven times higher, and from wind 15 times higher when compared with conventional power plants. Additionally, reports of the profitability struggles of many renewable developers are a testament to their economic challenges.

For EVs, the volume-weighted average retail price of EVs in the United States and Europe is higher than gasoline and diesel models, and EVs are heavily subsidized. Such subsidization cannot go on forever. Many automakers are also scaling back or delaying their EV plans, and some have declared bankruptcy. Clearly, the hype around EVs is wearing off, as consumers are showing a preference for continuing to have a choice of vehicles and as the huge challenges around electricity grids, battery manufacturing capacity and critical minerals increase.

For critical minerals in particular, imbalances between processing capacity and reserve concentration present significant challenges, such as supply chain bottlenecks, price gyrations, and geopolitical tensions. Moreover, mining is an energy-intensive activity that runs today on hydrocarbons. In fact, studies show that final energy consumption in mining activities could increase more than fivefold by midcentury.

Developing Country Needs

Thirdly, billions of people are playing energy catchup. Oil consumption in developing countries currently ranges from less than one to just below two barrels per person per year, compared with nine in the EU and 22 in the US. These countries will require more energy, not less, in the future. They cannot wait on costly alternatives when reliable, secure and affordable hydrocarbon options are already available at scale, ones that continue to provide prosperity to the developed world.

Fourthly, renewables and EVs do not own clean energy technologies or efficiency improvements solely. The oil industry is also advancing efficiencies and investing in technologies to reduce emissions, such as carbon capture, utilization, and storage, direct air capture, carbon dioxide removal, and clean hydrogen, alongside investing in renewables.

Rethinking Perceived Wisdom

It may make for some awkward conversations, but the perceived wisdom on the energy transition needs a serious rethink.

We need to move away from categorizing energy sources as good or bad.

We need to reflect the realities on the ground and park the misguided narrative of there being no need for new oil and natural gas fields. With oil and gas demand continuing to rise to historically high levels, it is not a prudent or stable way forward for global energy security.

We need to invest in all energies and technologies and recognize the needs of people around the world, delivering on both our energy security and climate objectives. All the dots require connecting, not just a few. Our energy and climate ambitions necessitate realistic policies that ensure that emissions are reduced while populations have access to affordable energy products and services they require to live a comfortable life.

Haitham Al Ghais is the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC).

By Haitham Al Ghais

What do toothpaste, deodorant, soap, cameras, computers, gasoline, heating oil, jet fuel, car tires, contact lenses and artificial limbs have in common?

If oil vanished today, these and many other vital products and services that use oil or its derivatives would vanish too. Transportation networks would grind to a halt, homes could freeze, supply chains would crash, and energy poverty would rise.

The World Energy Report for 2022, published by the UK-based Energy Institute and consulting firms KPMG and Kearney, noted that fossil fuels constituted 82% of global energy in 2022. This is comparable to OPEC’s latest world oil outlook and represents a similar level to 30 years ago.

Why then do most energy transition debates disregard the critical role that commodities like oil and gas continue to play in improving lives, fostering stability and energy security, as well as related industries’ efforts to develop technologies and best practices to reduce emissions? The scale of the climate change challenge is daunting, but meeting the world’s rising energy demand and mitigating climate change do not have to exist in a vacuum or be at odds with each other.

Rather, the world should act to reduce emissions and ensure that people have access to the products and services they need to live comfortably. Towards these goals, OPEC members are investing in upstream and downstream capacities, mobilising cleaner technologies and deploying vast expertise to decarbonise the oil industry. Major investments are also being made in renewables and hydrogen capacity, carbon capture utilisation and storage — as well as in promoting the circular carbon economy.

The bottom line is that it is possible to invest heavily in renewables while continuing to produce the oil the world needs today and in the coming decades. This approach also contributes to global stability at a time of volatility and is critical given that history shows that energy transitions evolve over decades and take many paths.

Take electric vehicles: Although the Toyota Prius became the world’s first mass-produced hybrid vehicle in the late 1990s, an analysis from the U.S. National Automobile Dealers Association noted that sales of hybrids, plug-in hybrids and battery electric vehicles (BEV) accounted for only 12.3% of all new vehicles sold in the U.S. in 2022.

While the rising popularity of electric vehicles is indisputable, total sales of BEVS also made up only 19% of new car sales in China last year. Similarly, in the EU, vehicles using petrol or diesel still accounted for around half of all car sales in 2022.

Thus, when it comes to the transportation sector – and indeed many other fields – it is clear that it would not be prudent to ignore that billions of people across the globe rely on oil and will continue to do so for the foreseeable future.

This becomes even more pressing when coupled with the investment needed to meet the rising demand for energy, ensure energy security and affordable access, and lower global emissions in line with the Paris Agreement.

Rising demand for energy

The world’s population is growing. OPEC’s World Oil Outlook (WOO) for 2022 sees it increasing by 1.6 billion people through 2045, while United Nations statistics note growth to around 10.4 billion by 2100.

In parallel, OPEC’s estimates that global energy demand will increase by 23% to 2045. Within this, oil demand is projected to increase to around 110 million barrels a day (mb/d). Thus, it is clear that oil will continue to be an essential part of the global energy infrastructure for decades to come. This is in stark contrast to the many proclamations of past decades that the age of oil was over. Indeed, contemporary demand is close to an all-time high and will rise by close to 5 mb/d in 2023 and 2024.

No single form of energy can currently meet expected future energy demand; instead, an “all-peoples, all-fuels and all-technologies” approach is required. As such, OPEC member countries are ready, willing and able to provide the affordable energy needed to cater towards these future energy needs, all the while reducing their emissions and helping eradicate energy poverty in doing so.

The UN notes that more than 700 million people still lack access to electricity, and almost one-third of the global population uses inefficient, polluting cooking systems. Daily life is not about cars, laptops or air conditioning for these people; it is about basic access to heat and electricity. To provide adequate and affordable universal energy access, and eradicate energy poverty, oil can and will play a key role in developing countries. The Global South has been – and continues to be – very clear about this; is the Global North taking heed?

Investment in oil is critical for energy security

Another worrying reality across the globe is that not enough investment is going into all energies. Looming oil demand growth alone necessitates far more investment if a sustainable supply is to be maintained.

Oil will make up close to 29% of global energy needs by 2045, with an investment of $12.1 trillion needed by then — or over $500 billion a year — but recent annual levels have been far below this.

The consequence of failing to invest adequately in oil is hammered home by recent OPEC Secretariat research outlining that in five years, there would be a staggering oil market deficit of 16 million barrels per day between forecasted rising global demand and supply if investments into upstream activities were stopped today — as some are calling for.

The oil industry has played a central role in improving billions of lives to date. If it is to continue to do so, and if the world is serious about implementing orderly energy transitions and meeting future energy demand while ensuring energy security for all, chronic under-investment in the industry needs to be remedied swiftly.

Ahead of this year’s United Nations Climate Change Conference (COP28) in the United Arab Emirates – where the world will evaluate progress on the Paris Agreement – COP28 President-Designate Dr Sultan Ahmed Al Jaber said the world needs “maximum energy, minimum emissions.” A healthy degree of pragmatism will be necessary to achieve this goal, especially given the clear need to utilise all energies if we are to meet the world’s current and future energy demands.

Ultimately, no people, industry or country can be ignored, and we believe that discussions at this year’s COP28 will reflect this. After all, history is filled with numerous examples of turmoil that should serve as ample warning for what occurs when policymakers fail to take on board energy’s interwoven complexities.

Al-Ghais is the Secretary General of the Organization for the Petroleum Exporting Countries (OPEC).

By Farid Suleiman

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, has revealed that from January to date, Nigeria has lost a total of N623BN worth of crude oil to the activities of oil vandals and operators of illegal refineries.

Reports indicate that the GMD  made the revelation when he appeared before the House of Representative committee on petroleum (upstream) that invited him to ascertain the cause of Nigeria’s low crude oil output.

Kyari said oil thieves steal an average of 250,000 barrels per day. This situation has limited Nigeria’s crude oil output to only 1.49 million barrels per day, against its OPEC quota of 1.753 million barrels per day.

“What is going on has nothing to do with the PIA. It is purely an act of thieves; acts of vandals which have rendered the industry unworkable and taken us to the level where today, our production is around 1.49 million barrels per day.”

“When you lose about 200,000 barrels per day, even at an average price of 65 dollars per barrel, we lost close to 1 billion dollars between January and March. 

“From January to date, we lost an average of 250,000 barrels per day, and at the current price of about 100 dollars to the barrel, even within this short period, we have lost close to 1.5 billion dollars.

“This situation deteriorated to the extent that by March 7, 2022, it came to zero, and so, we shut down the line and declared force majeure. Even on our most reliable pipeline, which is the Forcados pipeline, we still lose about 7000 barrels per day. Needless to say that this is all coming as a result of the acts of vandals and oil thieves,” he said.

However, the GMB assured the lawmakers that massive joint security operations among agencies were ongoing to address the situation.