Keynote Address by OPEC Secretary General at the Oil & Money Conference in London

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the Oil & Money Conference, Session: Strategies for the Energy Transition: ‘Perspectives on a Changing Energy Landscape’, 10 October 2019, London, England.

Excellencies, ladies and gentlemen,

Returning to my second home, London, in early October, it can only be for one thing: the annual Oil & Money conference.  This year’s event is a milestone; the 40th edition of this leading energy industry conference.

I would like to thank the Chair of this session, Amena Bakr, for her generous introduction, as well as the organizers, Energy Intelligence, for the invitation to speak to such a distinguished audience.

Over the four decades of this conference the energy landscape has changed a great deal, but one thing has remained constant: the ever-increasing need for stable and secure energy supplies as populations have expanded and economies have grown.  This remains true as we look at the decades to come.

The global economy in 2040 is expected to be double the size it was in 2018.   And world population is projected to reach around 9.2 billion, an increase of around 1.5 billion from today’s level.

We should also not forget that energy poverty remains a scourge of our time: even though, positively, the UN Secretary General’s progress report on the Sustainable Development Goals (SDGs) recently noted that the total number of people with access to electricity fell below one billion in 2017, there is much work still to be done.

Moreover, three billion people still lack access to low-emission fuels for cooking.

In OPEC’s most recent World Oil Outlook (WOO), we see global energy demand increasing by around 33% by 2040.

Energy will remain central to our daily lives; the lifeblood that enables us all to function and prosper.

Today, however, as referenced by the theme of this year’s conference, ‘Strategies for the Energy Transition’, the energy industry finds itself at a crossroads.

The world needs more energy, but this needs to be done in an ever more efficient and sustainable way; taking on board the challenges posed by climate change to our future.

Standing here before you today, I think it is important to state clearly OPEC’s position on climate change and the much talked about energy transition.

We fully support the science.  This is a given.  We do not deny the existence of climate change.  There are no climate deniers in OPEC.

OPEC takes climate change extremely seriously.  As responsible citizens of the globe, we also believe there is ‘no planet B’.

OPEC remains fully engaged and supportive of the UNFCCC and the Paris Agreement, which remain the only viable global frameworks to address climate change. All 14 OPEC Member Countries have signed the Paris Agreement and ten have ratified it.

We see it as a positive development that climate change issues have garnered increased public attention and enthusiasm.

It is our deeply held conviction that dialogue on this matter should be inclusive and broad to try and evolve this energy transition in the least disruptive manner.

We need to think carefully about what an energy transition actually means; and we all need to follow the right paths to lead us to a sustainable energy future.

We need to all work together, step-by-step, find issues of commonality and appreciate what is at stake.

We need to transition to a more inclusive world in which every person has access to energy.  A world where no one is left behind.

As Ben van Beurden, CEO of Shell, said at this conference yesterday: “The world needs oil and gas because it is what the world relies on for so much including, often, its most basic needs of heat and food and shelter.  And that will not change overnight.  This is why Shell will continue to invest in oil and gas, even as we work to help speed progress to a lower-carbon future.”

There are clearly some who believe the oil and gas industries should not be part of our energy future; that we should be consigned to the past.  That the future is one that can be dominated by renewables and electric vehicles.

It is important to state clearly that the science does not tell us this; it tells us that we need to reduce emissions and use energy more efficiently.  The stark statistics related to the blight of energy poverty do not tell us this either.

Renewables are coming of age, with wind and solar expanding fast, but even by 2040 in our WOO they are only estimated to make up around 19% of the global energy mix.

With nuclear expected to be at just over 6% and coal at just over 21% by 2040, it means that oil and gas combined are forecast to still supply over 50% of the world’s energy needs by 2040, with oil at around 28% and gas at 25%.

We appreciate that some will view this as an OPEC forecast, dispute the numbers, and state that the Organization is against renewables.

Firstly, let me say that many OPEC Member Countries have great sources of solar and wind, and we are seeing huge investments being made in this field.  And secondly, we do not see any reputable outlook projecting that renewables will come anywhere close to overtaking oil and gas in the decades ahead.

We welcome the development of renewables.

From the perspective of electric vehicles, there is also no doubt that they will continue to see expansion in the transportation sector.  We see this in our WOO with the share of electric vehicles in the total road transportation fleet projected to expand to around 13% in 2040.  Again, we support their development in a sustainable manner.

However, for many of the world’s population, it is clear that no matter which way you look at electric vehicles they do not offer a viable alternative to the internal combustion engine due to cost.  Moreover, there is also a debate about how environmentally friendly they are considering the build process for them, especially the batteries, as well as where the electricity is sourced from.

Here, I think it is also relevant to highlight one key detail from our WOO.  In the period to 2040, fuel efficiency improvements are expected to result in a far greater reduction in oil demand, than the increasing penetration of alternative fuel vehicles.

Excellencies, ladies and gentlemen,

To put it simply, the basic challenge of the energy transition we face today can be summed up in two questions.

How can we ensure there is enough supply to meet expected future demand growth?

And how can this growth be achieved in a sustainable way, balancing the needs of people in relation to their social welfare, the economy and the environment?

It all points to not limiting ourselves by putting all our eggs in one basket.  We need to look for cleaner and more efficient technological solutions everywhere, across all available energies.

As Bob Dudley, CEO of BP, said at this conference yesterday; when tackling emissions there needs “to be recognition that … there are many paths and we need to pursue them all.”

At OPEC, we recognize the complexity of the challenge.  Complex problems require comprehensive solutions.  The oil industry has to be part of the solution; it possesses critical resources and expertise that can help unlock our carbon-free future.

For oil and gas, the environmental challenge is not oil and gas themselves.  It is the emissions that come from burning them.

We are believers that solutions can be found in technologies, such as Carbon Capture Utilization & Storage (CCUS) and others, that reduce and ultimately eliminate these emissions.  We will need a very broad portfolio of emission removal technologies to tackle climate change.

We welcome coordinated action within the industry and through various research and development platforms, such as the Oil & Gas Climate Initiative (OGCI).

Given what I have just described, we also need to appreciate that policies and lobbying focused on shifting investors away from oil and gas are not the way forward.

Firstly, as Microsoft co-founder and prominent philanthropist, Bill Gates, said in a recent interview with the Financial Times: “Divestment, to date, probably has reduced about zero tonnes of emissions.”

And secondly, references to stranded assets and declining values in our industry advances a potentially dangerous scenario where the necessary investments may not be made, one that could increase volatility significantly and lead to a future energy shortfall.

Moreover, if those billions of people in the developing world that suffer from a lack of energy access feel they are being sidelined from energies that have helped fuel the developed world, then this could sow further divisions and expand the divide between the haves and have nots, the North and the South.

I am sure I speak for everyone in this room when I say how important funding and investment is in any talk of an energy transition and diversification.

This was a point referenced unequivocally by Patrick Pouyanne, CEO of Total, at this conference on Tuesday.

It is vital we have a stable environment and a level playing field; where the focus is not on the energy source, but on reducing emissions.

From OPEC’s perspective, let me stress that we fully identify with the fact that the foundation for investment, growth and economic diversification can only come through balance and stability in the market.

OPEC Member Countries remain fully committed to investments across the whole industry value chain, and the issue of returning global investments is a core focus of the ‘Declaration of Cooperation’, and the recently endorsed ‘Charter of Cooperation’.

Excellencies, ladies and gentlemen,

I am often asked, what the best way forward is when you look at the plethora of opinions and divergent viewpoints about the future energy transition.

I cannot say I have all the answers; no one does.  And if anyone says they do; then I might have to politely say they may not be telling the truth.

What I can say is that OPEC, and I am sure the entire oil and gas industry, welcomes dialogue with all stakeholders; and welcomes action too.

It was the British philosopher, Bertrand Russell, who once said:  “The only thing that will redeem (hu)mankind is cooperation.”

We can no longer work in silos; we can no longer see our futures in polarized terms.

We need to ensure sustainable growth, development and prosperity for ourselves, for our children and for our children’s children.

And we need to stress that the scale of the climate challenge means that no single energy source is a panacea; nor can the contribution of an entire industry or group of countries be overlooked.

Thank you.

HE Mohammad Sanusi Barkindo, OPEC Secretary General, delivers his keynote address

HE Mohammad Sanusi Barkindo, OPEC Secretary General, delivers his keynote address

HE Barkindo, OPEC Secretary General (l), with the session moderator Ms. Amena Bakr, Senior Energy Correspondent, Energy Intelligence, at the 40th edition of the Oil & Money Conference in London

HE Barkindo, OPEC Secretary General (l), with the session moderator Ms. Amena Bakr, Senior Energy Correspondent, Energy Intelligence, at the 40th edition of the Oil & Money Conference in London