Remarks by the Director of OPEC’s Research Division

Delivered by Dr Ayed S. Al-Qahtani, Director of OPEC’s Research Division, on behalf of OPEC Secretary General, HE Mohammad Sanusi Barkindo, at the Energy System Drivers session at the G20 Energy Ministerial Meeting, 27 September 2020, via videoconference.

[Slide 1]

Excellencies,

Despite the contraction in 2020, global primary energy demand is forecast to continue growing in the medium- and long-term, increasing by around 25% between 2019 and 2045. Within this forecast, there are important regional differences.

Energy demand in the OECD is expected to decline slightly over the period. As a result, the non-OECD is expected to be the driver behind energy demand growth, with India and China contributing a large share of this growth.

[Slide 3]

In terms of the energy mix, the share of other renewables – consisting mainly from wind, solar and geothermal energy – will increase the most. Natural gas will also increase its share, while the share of oil and coal will decline. Nevertheless, oil is expected to maintain its leading role in the global energy mix over the entire forecast period.

As this slide shows, all energy sources will be needed to achieve the massive challenge of meeting future demand and expanding energy access to eradicate energy poverty.

[Slide 4]

In terms of investment, the most recent assessment shows that cumulative oil-related investment requirements over the period to 2045 will be almost $13 trillion, including investments in the upstream, midstream and downstream.

In 2015 and 2016, investments fell by 26% and 24%, respectively, year-on-year. After recovering somewhat in the last two years, upstream investments are estimated to have fallen by 32% in 2020, in response to COVID-19 related disruptions. Such levels are not sustainable if supply is to be sufficient to meet expected future demand. Adequate and timely investments are essential not only to meet rising demand but also to replace lost production due to natural decline. Therefore, reduced upstream investment is one of the key downside risks to the outlook for global supply.

Excellencies,

[Slide 5]

The energy industry faces the dual challenge of meeting future energy demand and contributing to energy transitions. In this regard, the following four key areas will need to be targeted.

The first is to expand energy access. Current estimates by the UN show that, without additional effort, 620 million people will still be without access to electricity in 2030. Similarly, some 2.3 billion people would still be cooking with inefficient traditional sources, posing environmental, health and socio‐economic threats if efforts are not accelerated.

Secondly, investments will also be essential to improve energy efficiency across all sectors to ensure that the energy is produced and consumed with the lowest possible footprint in terms of greenhouse gases (GHG).

Thirdly, investments will be needed to support transitions to cleaner fuels. However, the focus should not be restricted to renewables. The extended use of natural gas, cleaner oil products and hydrogen provide viable options to meet the dual challenge of growing energy needs and reducing emissions.

The fourth is to reduce greenhouse gas emissions. It should be kept in mind that there is no panacea and each country will need to follow its own path, taking into account its national circumstances and priorities. In this regard, CCUS provides an important opportunity to meet increasing energy demand, while minimizing greenhouse gas emissions, as it has applications across the energy system.

[Slide 6]

Thank you.

Speech slides

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HE Mohammad Sanusi Barkindo, OPEC Secretary General

HE Mohammad Sanusi Barkindo, OPEC Secretary General

Dr Ayed S. Al-Qahtani, Director of OPEC’s Research Division

Dr Ayed S. Al-Qahtani, Director of OPEC’s Research Division