Address by OPEC Secretary General

Delivered by HE Haitham Al Ghais, OPEC Secretary General, at the Energy Asia conference, 26 June 2023, Kuala Lumpur, Malaysia.

Honourable Prime Minister, Excellencies, ladies and gentlemen,

It is a great privilege to be here in Kuala Lumpur this morning to listen to the Honourable Prime Minister of Malaysia, Dato’ Seri Anwar Ibrahim.

I would like to thank the Prime Minister for his wise words, and also for Malaysia’s continued support for the Declaration of Cooperation (DoC) between OPEC and non-OPEC producers, widely known as OPEC+.

Malaysia’s effective participation in the DoC since it was inaugurated at the end of 2016, has been instrumental in helping the oil industry overcome two historic downturns, most recently during the COVID-19 pandemic.

At OPEC, we look forward to continuing to work with the government’s Head of Delegation to DoC meetings, His Excellency Mohammad Rafizi Bin Ramli, Malaysia’s Minister of Economy and his team in the coming months and years.

I would also like to take this opportunity to thank my good friend, Tan Sri Tengku Taufik, President & Group CEO of Petronas and Chairman of Energy Asia.

I recall meeting him earlier this year in Davos – and listening to his views on a host of topics, including the need for an inclusive and sustainable energy transition.  He is an extremely eloquent advocate for the oil and gas industry.

Excellencies, ladies and gentlemen,

Malaysia has a long and distinguished oil industry history, dating back to 1910. This was the year when the country’s first oil well was spudded on Bukit Telaga Minyak (Canada Hill) in Miri, Sarawak.  It produced its first oil by the end of the year and continued producing for a further 62 years.

Known as the ‘Grand Old Lady’, the well is now a monument that still overlooks the town of Miri.

It is a mark of Malaysia’s extensive oil history, a sign of oil’s continuing importance to the country today, and I firmly believe to its future.  This future also needs to be set into the context of the overall theme of this conference: Charting Pathways for a Sustainable Asia.

Allow me to stress that the issue of sustainable energy pathways goes to the core of OPEC’s founding commitment to support a stable and sustainable oil market, in the interest of producers, consumers and the global economy.

This has gained additional momentum over the past six years or so in working with other leading oil-producing countries through the DoC.

Together, we have been front-and-centre in supporting a balanced and stable global oil market.  This was clearly on display at the most recent ministerial meeting earlier in June, with the group following its successful approach of being precautious, proactive, and pre-emptive.

The importance of market stability is not only vital for the short-term, it is critical for the long-term too.

In OPEC’s World Oil Outlook (WOO), we see global energy demand increasing by 23% through 2045, and I see no credible way to address this without utilizing all available energy sources, and with energy market stability as a guiding light.

Renewables will play a much greater role, and contrary to what some may say, OPEC Member Countries are already investing significantly in this area. Gas, hydro, nuclear, hydrogen and biomass will also expand, BUT, it is clear that oil will remain an integral part of the mix. 

Every data-based forecast that I have seen shows that oil is irreplaceable for the foreseeable future.  In our WOO, we see global oil demand rising to 110 million barrels a day by 2045, and oil still making up about 29% of the energy mix by then.

A massive energy expansion is required as we see the global economy more than doubling in size, and the world’s population reaching 9.5 billion by 2045.  Moreover, as we all know, there remains a critical need to bring modern energy services to those billions that continue to go without basic energy access in many parts of the world.

While we must continue to provide more energy to the world, we also recognize the need to continually reduce emissions and decarbonize, subscribing to global best practices and cutting edge, best-in-class technologies.  For example, carbon capture utilization and storage, clean hydrogen technologies, the circular carbon economy, and others.

Meeting the expected future energy growth, while also lowering global emissions, requires unprecedented investment and collaboration.

Chronic underinvestment in the industry, not just oil, but across all energies, is putting the viability of the whole energy system at stake.  It is a point I have continually highlighted since becoming OPEC Secretary General.

In our WOO, for the oil industry alone, investment requirements equate to $12.1 trillion, or over $500 billion each year between now and 2045. 

Recent annual levels have been significantly below this, due to industry downturns, the pandemic, and the increasing focus on environmental, social and governance issues.

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, as well as developed and developing countries.

For OIL, we have heard appeals over the last year or so for producing countries to play a key role in ensuring stable and sustainable global energy supplies.  At the same time, however, we have also constantly heard calls to end financing in oil projects.

The two sentences simply do not fit together.

Let me ask investors in the audience today: would you invest if you do not see security of demand, particularly in an industry where returns can take a decade or more?

Talk of no new investment in oil projects will only lead to energy chaos.  We need energy clarity, not energy chaos.

We also need facts, not fantasy to take us through a just, inclusive and realistic transition.

Excellencies, ladies and gentlemen,

In recent years, we have heard of net-zero targets and scenarios in which global demand drops to around 80 mb/d by 2030, which is more than 20 mb/d below today’s level.  We need to remember that 2030 is only six years from now!

Over the period to 2030, however, it is expected that another half a billion people will move into cities across the world as the global economy continues to expand.

Being in Malaysia, and to put this in an understandable context, this urbanization drive will require the addition of approximately 50 new Kuala Lumpurs.

It goes without saying therefore that the world will therefore need more, not less oil, alongside the need to continually reduce emissions.

This returns to me the need for facts and energy clarity.

What has become apparent in the past few years or so is that references to net-zero numbers have sown confusion among investors and policymakers. This is not a positive recipe for either producers nor consumers.

Excellencies, ladies and gentlemen,

When I listened to my friend Tan Sri Tengku Taufik in Davos earlier this year, a line stuck out to me.  He said when talking about the energy transition: “Don’t sacrifice the good for the perfect.”

It makes absolute sense to me.  We cannot get everything absolutely right.  Moreover, we need to recognize that we should be talking about energy transitions.

It has to be a plural, as I firmly believe that each nation and peoples have their own energy transition pathway.  The capacities and national circumstances of developing countries must be taken into account.

Addressing the energy and climate challenges must put fairness at its heart, making sure businesses, governments, and communities can come together to deliver genuine and real change.

Standing here in Kuala Lumpur is a reminder of two things.

Firstly, that Asia is at the heart of our global energy future.  It has to have its own say in the challenges related to its energy security, availability and the need to reduce emissions.

Secondly, the vital role of Malaysia, both as a partner with OPEC in the DoC and as a regional and global energy leader, through both the national government, and its national oil company, Petronas.

At OPEC, we very much look forward to continuing our fruitful collaboration with Malaysia, and ensuring we deliver the energy clarity we all need.

Thank you, and Terima Kasih.

HE Haitham Al Ghais, OPEC Secretary General

HE Haitham Al Ghais, OPEC Secretary General