Keynote address by OPEC Secretary General

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the opening ceremony of the 20th Nigeria Oil and Gas Conference and Exhibition, 6 July 2021.

Excellencies, distinguished delegates, ladies and gentlemen,

It is both an honour and a privilege for me to address this 20th edition of the Nigeria Oil and Gas Conference and Exhibition. Although it would have given me the utmost pleasure to return home and be with you in person, unfortunately the ongoing COVID-19 restrictions have prevented me from doing so. This being the case, we nevertheless join you there in Abuja in heart and soul!

Allow me to first recognize His Excellency, President Muhammadu Buhari and express my deep appreciation for his avid, undying support of Nigeria’s energy industry, which is so well represented at the proceedings of this Conference and Exhibition.

Mr. President, allow me, on behalf of OPEC, to congratulate you on the Petroleum Industry Bill (PIB), which was just passed by both chambers of 9th National Assembly of our great country. This long-awaited legislation for the oil and gas sector will help guide the necessary reforms designed to strengthen institutions, solidify regulatory and fiscal frameworks and attract much-need investment in a sustainable manner. The 9th National Assembly has engraved itself in gold in passing the Petroleum Industry Bill.

Additionally, OPEC is deeply indebted to President Buhari for the leading role he has played and continues to play in support of the OPEC-non-OPEC Declaration of Cooperation process. This historic achievement has ushered in a new era in global energy cooperation as OPEC and its non-OPEC partners continue to provide crucial support to the oil market, in the interest of producers, consumers and the global economy.

I would like to also recognize my brother, His Excellency, Timipre Sylva, Minister of State for Petroleum Resources and Head of Delegation for OPEC. Excellency, your leadership and active participation continue to enrich our ongoing pursuits to forge a lasting stability in the oil market. On the domestic front, your ongoing contributions and leadership in guiding Nigeria’s energy industry into the future are both impressive and commendable.   

Excellencies, distinguished delegates,

In its 20 years, the Nigeria Oil and Gas Conference and Exhibition has risen to become one of Nigeria’s and indeed Africa’s largest and most prominent industry events.

Its creation was the brainchild of two icons of our industry. I am referring, of course, to the late Dr. Rilwanu Lukman of Nigeria and the late Dr. Alirio Parra of Venezuela.

Their close working relationship, visionary leadership and even more importantly their strong personal friendship were the key ingredients behind the creation of this important forum we are having today.

We will miss these two industry icons more than ever this year as OPEC returns to its birthplace in Baghdad, Iraq this September to commemorate the 60th anniversary of its founding. I assure you, however, that their names will figure prominently in the many heartfelt tributes that will be made on this very special occasion.

Indeed, we will have a full programme of festivities planned to mark this momentous occasion, including the launch of the 60th Anniversary commemorative book, entitled OPEC at 60 and Beyond, which offers an in-depth chronology of the life and times of OPEC from 1960 to date.

Speaking of commemorations, we have another major milestone to celebrate this July, and that is the 50th Anniversary of Nigeria’s Membership in OPEC. We commemorate this golden anniversary with a very special edition of the OPEC Bulletin, which provides us with a splendid walk down memory lane from July of 1971 when Nigeria joined OPEC to the present day. This collector’s edition will be a fitting tribute for a nation that has been so instrumental in OPEC’s rich history.

Over the last five decades, OPEC and Nigeria have sown the seeds of friendship to build a highly fruitful and mutually beneficial relationship, forging strong ties that will last forever. Both the Nigeria at 50 special edition of the OPEC Bulletin and the 60th Anniversary Book chronicle and pay due tribute to this enduring partnership.

Many leading figures in the Nigerian energy establishment have contributed greatly to its successful membership in OPEC.

Over the past 50 years, Nigeria has had 23 Petroleum Ministers, 6 of whom have served as OPEC Conference Presidents and 4 of whom served as Secretary General.

The Conference Presidents were: Shettima Ali Monguno, Mallam Yahaya Dikko, Dr. Rilwanu Lukman, Prof. Jibril Aminu, His Royal Highness, Dr. Edmund Daukoru and Emmanuel Ibe Kachikwu.  Of these, Dr. Lukman takes the record, having presided over 14 Ministerial Conferences! These Presidents chaired 26 OPEC Ministerial Conferences around the world, including in Lagos, Abuja, Vienna, Geneva, Brioni, London, Osaka and Caracas.

The 4 Nigerian Secretaries General, including myself, were: Chief M.O. Feyide, Dr. Lukman, who held the post twice, and His Royal Highness, Dr. Edmund Daukoru. They served a combined total of 15 years, which is 30% of the time we have been a Member of OPEC! This is testament to Nigeria’s role as a diplomatic force and consensus builder within the Organization.

It is also important to mention here that our current esteemed President, His Excellency Muhammadu Buhari, also served as Minister of Petroleum Resources from May 1976 until September of 1978, during which time he led Nigeria’s delegation to OPEC. He is currently the only President who has also served as an OPEC Minister.

I invite you all to join us as we celebrate the countless contributions Nigeria has made to OPEC’s rich history over the last half-century.

Excellencies, distinguished delegates,

In OPEC’s eventful 60-year history, one thing that we have learned is that, in this industry, you must learn to “expect the unexpected”.

And sure enough, last year, we were reminded of just this when the World Health Organization announced on March 11th 2020 that the rapidly spreading COVID-19 virus was now a global pandemic.

This health crisis was and continues to be, first and foremost, a human tragedy with countless innocent lives being lost. But, it has also exacted major damage on the global economy and on oil demand, which dropped by a stunning 22 mb/d in April of 2020 at the height of the pandemic. The world economy contracted by 3.4% year-over-year in 2020.

Nigeria and its fellow OPEC Member Countries suffered massive economic losses, and its oil and gas industries were in dire straits. However, the rapid and decisive response of the DoC producers once again came to the rescue and delivered CPR to an industry on the verge of collapse.

In the past weeks and months, we have seen a welcome shift in momentum as significant progress continues to be made on the rollout of global vaccination campaigns.

More than 3.2 billion doses have now been administered globally, and millions more are being provided each day. Additionally, there are signs that the international community is ramping up its support to developing countries to help bolster their acquisition of life-saving vaccines. In this regard, the G7 recently announced combined pledges of 1 billion COVID-19 vaccine doses to be distributed around the world, of which at least half are expected to be delivered by the end of 2021.

Our hope is that this support will continue to grow in the weeks and months to come. The world will only truly defeat this pandemic when both developing and developed countries have the ability to vaccinate their populations to reach herd immunity. This, in turn, will enable all countries to re-open their economies and bring their energy industries back up to full-speed.

The global economy has, for the most, part recovered and is expected to see growth of 5.5% this year, and we forecast world oil demand to rise by 6.0 mb/d.  Both the economy and oil demand are expected to see accelerated growth in the second half of this year.

There is, however, a range of uncertainties that we are monitoring closely. These include an elevated risk of inflation due to massive financial stimulus programmes, uneven vaccine rollouts across the world and the spreading COVID-19 Delta Variant, which is now even impacting countries with high vaccination rates.

This challenging backdrop will require the Declaration of Cooperation producers to remain proactive, flexible and vigilant. This prudent approach moving forward will enable the DoC to remain agile and responsive while avoiding unwanted market imbalance after April 2022. In this regard, following the most recent Ministerial Meetings held at the beginning of July 2021, the DoC producers will continue to convene on a monthly basis within the context of the Declaration of Cooperation.

Excellencies, distinguished delegates,

I would like to now switch gears and move to the theme of this keynote address, which is: Global Oil Market Dynamics in a Decarbonizing World.

As you have surely read in the headlines over the past year, the unpredictability and volatility brought on by the pandemic has intensified discussions related to climate change and the energy transition.

Countries around the world are feverishly attempting to adapt to the rapidly changing dynamics in the energy industry in an effort to adapt and mitigate the impacts of climate change.

Investors, environmental lobbyists and even some corporate boards are pressuring oil companies and governments to pursue radical policies and initiatives that could, in the end, be more disruptive than productive for the global energy industry.

There have recently even been calls for investments in oil and gas to be discontinued, which is a dangerous and unrealistic scenario. These voices have emerged particularly in the context of the net-zero 2050 emissions discussions.

The fact is, however, that oil and gas have an important role to play in the energy transition. Let me be clear, OPEC supports the need to reduce emissions, bolster efficiency and embrace innovation, but we must be aware of the risk we run of not adequately investing in the future of this industry. We are already dealing with the harsh impacts the COVID-19 pandemic has had on investment, which declined by 30% in 2020.

If this were to continue, we could see demand exceed supply, posing a significant energy security risk to both producers and consumers. And this, of course, could result in knock-on effects for both the global economy and geopolitics.

One must also consider that, although many of OPEC’s Member Countries have made good progress in diversifying their economies, many of them rely primarily on revenue from their oil and gas assets to support their economic and social development.

Let’s face it, there is simply not a “one size fits all” solution to addressing climate change. Different countries around the world have varying capabilities and diverse needs. Thus, reducing emissions has many paths, as set out by the Intergovernmental Panel on Climate Change (IPCC), and we must consider all of them as viable options.

Additionally, when considering the scale of the energy transition, we must harness all available energies.

The oil and gas industries have much to offer in this regard, including some of the world’s most cutting-edge technologies and advanced innovations, which can all be leveraged to promote a lower carbon future.

From the perspective of science and innovation, we believe technologies such as carbon capture, utilization and storage (CCUS), hydrogen and other technologies are viable options for reducing the carbon footprint.

Energy efficiency programmes will also be key, and the Circular Carbon Economy, which was endorsed by the G20 under the Presidency of the Kingdom of Saudi Arabia is a blueprint for how this industry can improve its efficiencies while reducing emissions. CCE with its four “Rs” - reduce, reuse, recycle and remove – provides a balanced and inclusive solution for dealing with greenhouse gas emissions.

OPEC also welcomes the development of renewables, and many of our Member Countries are leading the way with massive investments in solar and wind resources.

Excellencies, distinguished delegates,

Achieving net zero emissions by 2050 is already a great challenge for advanced economies, some of whom have expressed their doubts about the reality of achieving this ambitious goal. And thus, for developing nations, it is even that much more daunting, particularly as they are occupied with ensuring their basic needs are met day in and day out. Each day is a challenge to simply put food on the table and earn a decent living wage.

There are emerging doubts as to how realistic the net-zero approach is, particularly when considering the unique circumstances of developing countries, especially in combatting another scourge, namely energy poverty.

Allow me to point out three significant challenges to achieving net-zero emissions by 2050, namely scale and timing, supply chains and the developing world.

In terms of scale and timing, the 28-year period from now until 2050 is not adequate to achieve net-zero emissions, considering the scale of investments required, the availability of land, the required massive expansion of the electricity grid and a host of nearly 400 milestones that would need to be reached to achieve the net-zero goal. The last transition took nearly 200 years to cycle through, and now we want to achieve an even more ambitious transition in less than 30 years! This is simply not realistic.

Additionally, a swift transition to clean energy sources would be highly reliant on the steady, robust supply of critical minerals such as copper, cobalt, lithium, nickel and aluminium, many of which are produced in a geographically centralized area. We must also consider that the amount of mineral material needed to produce energy is higher than with fossil fuels. For example, a typical electric car requires six times the mineral inputs than that required to power a conventional vehicle with fossil fuels, and an onshore wind plant requires nine times more mineral resources than a gas-fired plant of the same capacity. Furthermore, lengthy lead times on mining projects, which can surpass 16 years, could inhibit the sector from responding to increases in demand.

Finally, the net-zero scenario assumes that both developed and developing countries will achieve the proposed targets by 2050, with developed countries reaching their targets earlier. However, let me remind you that a staggering 790 million people worldwide did not have access to electricity in 2020, most of them located in Sub-Saharan Africa and developing Asia. Moreover, there were roughly 2.6 billion people who did not have access to clean cooking fuels, 35% of whom were in Sub-Saharan Africa, 25% in India and 15% in China. And, let us not forget that these are the very regions that are expected to see the most rapid population growth by 2050.

This brings me to the critical topic of energy transition financing, which will be a highly debated issue at the upcoming COP26 in November.

The achievement of the net-zero 2050 goals would assume that developing countries will receive the required financing and technological know-how they require to build and readjust their energy systems in line with the net-zero ambitions by 2050.

However, climate financing for adaptation and mitigation is an extremely complex process, and questions continue to be raised as to how the $100 billion per year committed in the Paris Agreement will be secured, much less the even more ambitious $5 trillion annual funding needed globally as set out by the net-zero 2050 plan.

Another issue of concern is that climate financing is increasingly being administered as loans, which means that developing countries are required to borrow at interest rates that can sometimes be prohibitively high, effectively leading them to defer or cancel their clean energy projects.

These important factors all point to the fact that an energy transition on such a massive scale and within such a short timeframe will take time and patience to achieve, especially if it is done responsibly, in an equitable and inclusive manner.

Excellencies, distinguished delegates,

Let us remind ourselves that Sustainable Development Goal number seven of the United Nations was established to ensure access to affordable, reliable, sustainable and modern energy for all people. OPEC firmly believes that nobody should be left behind in the energy transition.

History tells us, however, that in times of great challenge and crisis, developing countries are more prone to experience social unrest, rising inequality and increased poverty. Thus, it is of utmost importance that this energy transition be both equitable and inclusive. To achieve this, we must work through the multilateral system with the dedication and support of all energy stakeholders.

OPEC will continue to work closely with its Member Countries to advocate for real change on this topic in all relevant international fora, including the upcoming COP26 in Glasgow.

It is essential that we use as our energy and climate roadmap in accordance with the core principles of the United Nations Framework Convention on Climate Change, namely equity, historical responsibility and the principle of common but differentiated responsibilities and respective capabilities.

Excellencies, distinguished colleagues, ladies and gentlemen,

To meet the future challenges I have just outlined, we are convinced more than ever, that the world needs to see more dialogue and more cooperation in an inclusive fashion. OPEC is doing its part through the landmark OPEC and non-OPEC Declaration of Cooperation, and we also continue to engage in high-level producer-consumer dialogues with the European Union, China, India and the United States, as well as with a host of international organizations.

In closing, allow me to inspire you with the sage words of 13th century philosopher and scholar Muḥammad Rūmī who said, and I quote:

“Don't be satisfied with stories, how things have gone with others. Unfold your own myth.”

Excellencies, distinguished delegates,

When we think about our beloved continent of Africa, let us not be satisfied with stories of how it has gone with others, but, as Muhammad Rumi teaches us here, let us unfold our own myth, let us tell our own story and let us do all we can do to see Africa thrive and reach its full potential for this and future generations.

Thank you.

HE Mohammad Sanusi Barkindo, OPEC Secretary General

HE Mohammad Sanusi Barkindo, OPEC Secretary General