Plenary Remarks by OPEC Secretary General at the Kuwait Oil & Gas Show and Conference

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the SPE Kuwait Oil & Gas Show and Conference, Executive Plenary Session: The New Energy Transition: Policy and Sector Prescriptions, 13 October 2019, Kuwait City.

Excellencies,
Dignitaries,
Ladies and gentlemen,

I am honoured to participate in the Kuwait Oil and Gas Show, under the patronage of the Prime Minister, HH Sheikh Jaber Al-Mubarak Al-Hamad Al-Sabah, and to be part of this panel with such esteemed colleagues. I have great admiration for our moderator, Dr Nader Sultan, who has distinguished himself through his life-long contributions to the world of energy.

It is always a pleasure for me to return home to the great State of Kuwait, one of five Founder Members of OPEC. I am grateful to my brother Dr Khaled Al-Fadhel, Minister of Oil, Electricity and Water, for helping to make this event possible and for hosting us so generously, and the inexhaustible energy he devotes to OPEC since his arrival as a key member of the family.

I was inspired by the comments of Dr Al-Fadhel along with those of Hashem Sayed Hashem, Deputy Chairman and CEO of the Kuwait Petroleum Corporation, and Dr Sami Alnuaim. Dr Alnuaim very capably wears two hats – one as President of the Society of Petroleum Engineers, the other as Manager of the Petroleum Engineering Application Services Department at Saudi Aramco.

It is a testament to the hard work of all the organizers and contributors that the Kuwait Oil & Gas Show has in a very short time become a premier industry event, held in this heart of the world’s most important oil-producing region.

Ladies and gentlemen,

Turning to our panel discussion this evening, allow me to make a few points about how OPEC views ‘The New Energy Transition’.

As is true of any business, the oil industry faces inevitable challenges and uncertainties. Today, we are feeling the headwinds of the US-China trade situation and other geopolitical tensions, slowing growth in some of the leading economies, and the risk of supply/demand imbalance.

Yet if we look a little further down the road, the outlook for the petroleum industry remains bright.

OPEC’s flagship publication, the World Oil Outlook, projects steady future growth in the demand for oil. This rise in demand is based on the growing energy needs of developing countries, with their expanding populations and middle class.

Let me highlight a few assumptions from the current Outlook:

• Overall energy demand will increase 33% from 2015 to 2040, with almost 95% of that demand coming from developing countries, led by India and China.
   
• Crude oil will continue to account for the largest share of the energy mix by 2040 – around 28% – and oil and gas together are projected to make up more than 50% of the global energy needs.
   
• Worldwide oil demand is forecast to grow by around 14.5 million barrels per day, rising to nearly 112 million barrels per day by 2040.
   
• Road transportation will remain one of the main drivers of oil demand – even taking into account advances in efficiency, tightening emissions policies and the growth of electric vehicle use. Our projections show that the total vehicle stock is estimated to grow by around 1.1 billion between 2017 and 2040, to 2.4 billion vehicles, with electric vehicles accounting for just 13% of the overall fleet by 2040.
   
• The largest incremental demand growth for crude oil is projected to come from the petrochemicals sector, according to the Outlook.

Ladies and gentlemen,

While the outlook for the petroleum sector is bright, the industry also has a responsibility to be part of the solution to the challenge of climate change. We must be more than a stable energy supplier.

Let me identify three important and interconnected points on how we can retain a competitive position while addressing the climate issue.

First, the oil industry needs both a seat at the table in the discussions on the energy future – and a level playing field when it comes to energy policy making.

This is why OPEC has supported the Paris Agreement and is fully engaged at the multilateral level in discussions on climate policy: We too believe that we have no alternative planet to relocate to!

OPEC has demonstrated in other ways how dialogue, transparency and cooperation are the most effective approach to successfully dealing with challenges.

Allow me to cite the example of the ‘Declaration of Cooperation’ between the 14 OPEC Member Countries and 10 other important oil-producing nations. This strategic partnership is built on – and owes its success to – the values I just mentioned: dialogue, transparency and working together.

The ‘Declaration’ has been a game-changer for the industry. The production adjustments undertaken by the participating countries over the past three years have reversed the severe oil market crisis of 2014-2016 and restored durable stability to the global oil market.

OPEC and the world will continue to be indebted to His Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah for the leadership role he played in midwifing the ‘Declaration of Cooperation’. The epitome of statesmanship and humility, I was privileged to drink from his fountain of wisdom and immensely benefited from his rich reservoir of knowledge as well as extensive global experience in those difficult times.

On behalf of myself and OPEC, we wish His Highness long life, good health and many years of service to Kuwait and the international community.

The success of the partnership and the market-balancing measures it has undertaken owe much to the unwavering support of Kuwait that continues to serve on our JMMC and the steadfast leadership now being set forth by Khaled Al-Fadhel.

In July this year, the 24 participating countries in the ‘Declaration of Cooperation’ unanimously endorsed a ‘Charter of Cooperation’. This voluntary initiative puts us in a stronger position over the longer term to address areas of common interest, including energy security, the energy transition and the challenge of climate change.

Since dialogue, transparency and cooperation have been so successful in rescuing the oil industry from the most severe cycle, why not apply the same values to addressing other challenges? That is, to turn challenges into opportunities?

A second important point about the energy future is the need for sustained leadership in the development and deployment of technologies that have – throughout the history of the oil industry – fostered progressive improvements in efficiency, exploration and delivery.

Looking ahead, the successful deployment of carbon capture, utilization and sequestration (CCUS) and other emissions-reducing innovations could strengthen the industry’s competitiveness and affirm its commitment to tackle climate issues.

Many OPEC Member Countries are fortunate to have abundant renewable energy potential and are working to exploit these resources for industrial and domestic use, while also harnessing advanced technologies to improve efficiency along the entire petroleum production chain.

Finally, the oil industry needs a supportive investment climate if we are to meet the world’s energy needs and deliver solutions to climate challenges. OPEC estimates that investments of almost $11 trillion in the industry will be needed to address the demand and supply outlook I mentioned earlier.

The most disadvantageous and harmful factors that dampen the investment in oil and gas sector are extremes in market volatility, geopolitical interference, and more recently the discriminatory nature of policies against oil and gas.

As Bill Gates noted recently, fossil fuel divestment has zero climate impact. The Microsoft founder’s advice to investors is to instead back technology that helps cut emissions:

“Those who want to change the world would do better to put their money and energy behind the disruptive technologies that slow carbon emissions and help people adapt to a warming world.”

Ladies and gentlemen,

Oil has fuelled the current civilization and will continue to remain a fuel of choice in a broader energy mix if the whole industry and major stakeholders – policymakers, corporate chieftains, scientific institutions, financial and investment community – all rise in unison and confront the twin challenge of climate change and energy poverty. The best is yet to come for the oil and gas industry.

Thank you.