OPEC bulletin 3–4/17
I P W e e k
he international oil industry cannot afford to see invest-
ment levels fall for a third year in a row, according to OPEC
Secretary General, Mohammad Sanusi Barkindo.
Addressing the International Petroleum Week in London on
February 21, he told delegates that the gravity of the sharp con-
traction in oil industry investment had been underscored in the fact
that, in both 2015 and 2016, a dramatic rationalization of projects
In his keynote address to the event on
‘The future economy of
oil from the Middle East and across OPEC’,
Barkindo pointed out
that global oil and gas exploration and production spending fell by
around 26 per cent in 2015 and a further 22 per cent in 2016.
“Combined, this equates to above $300 billion. This has
impacted new projects coming onstream and new discoveries too,”
He stressed that stability in the oil market today was also vital
for stability in the future, given that the oil industry was very much
a medium- to long-term business.
“Moreover, the industry remains a growth business. We see the
world requiring more oil in the years ahead. Oil will remain a fuel
of choice for the foreseeable future,” he maintained.
In OPEC’s latest
World Oil Outlook (WOO)
, oil was still expected
to supply over 26 per cent of the world’s energy demand by 2040.
Oil demand increased by around 17 million barrels/day between
2015 and 2040 to reach close to 110m b/d, he observed.
“This will require significant investments. And new barrels are
needed to not only increase production, but also to accommodate
for decline rates from existing fields.”
“Overall, we see oil-related investment requirements of around
$10 trillion over the period to 2040.”
Barkindo asserted that the oil industry needed regular, timely
and sustainable investment to guarantee security of supply to the
“It is essential for our industry’s future and that of the global
economy. It is essential to all those consumers around the world
who rely on hydrocarbon resources for their everyday needs. And
it will be essential to the future of those currently without access
to modern energy services,” he stated.
In this regard, the OPEC Secretary General contended that it
should not be forgotten that today 2.7 billion people still relied on
biomass for their basic needs and 1.3bn had no access to electricity.
Barkindo told delegates that it was also important to note where
the future supplies were expected to come from. OPEC’s
jected that non-OPEC liquids production would see a recovery in
the medium-term, after dropping considerably in 2016. However,
it would reach a plateau over the next decade, reaching 61.4m b/d
in 2027, before declining to 58.9m b/d by 2040.
“In the long-term, it is OPEC that will be required to meet much
of the expected additional demand,” noted Barkindo.
He said in terms of crude, OPEC’s supply was estimated to
increase to 41m b/d by 2040, an increase of around 9m b/d from
2016, while non-OPEC supply was anticipated to witness an overall
decline of 2m b/d. In terms of all liquids, the increase for OPEC was
close to 12m b/d from 2016, and for non-OPEC there was growth of
about 3m b/d. “It means that the estimated share of OPEC crude in
the total world liquids supply in 2040 is 37 per cent, which is three
percentage points higher than the 2015 level,” the OPEC Secretary
To meet their obligations as secure and reliable suppliers of oil
to world markets, he said, OPECMember Countries remained com-
mitted to investing in new capacity and the necessary infrastruc-
ture, despite the downturn the industry had witnessed in the last
couple of years.
“We believe that the recent decisions taken by OPEC and non-
OPEC countries are already creating the favourable conditions for
the industry to deliver the necessary medium- and long-term invest-
ments for our energy future,” he professed.
Barkindo was referring to the landmark and historic decisions
made by OPEC towards the end of 2016 — in Algiers, Algeria, in
September and Vienna, Austria, in November, followed by the
‘Declaration of Cooperation’ with non-OPEC producers, reached in
the Austrian capital in December.
He explained to the audience that since he spoke in London the
last time — at the
Oil & Money
conference in October 2016 — from
the perspective of OPEC and the oil industry as a whole, a lot had
happened. “My discussions back in October 2016 were focused
on OPEC’s Algiers decision adopted at the 170
Meeting of the OPEC Conference on September 28. At this meeting,
Oil sector cannot afford another
year of lost investment — Barkindo