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OPEC bulletin 3–4/17

I P W e e k


he international oil industry cannot afford to see invest-

ment levels fall for a third year in a row, according to OPEC

Secretary General, Mohammad Sanusi Barkindo.

Addressing the International Petroleum Week in London on

February 21, he told delegates that the gravity of the sharp con-

traction in oil industry investment had been underscored in the fact

that, in both 2015 and 2016, a dramatic rationalization of projects

was witnessed.

In his keynote address to the event on

‘The future economy of

oil from the Middle East and across OPEC’,

Barkindo pointed out

that global oil and gas exploration and production spending fell by

around 26 per cent in 2015 and a further 22 per cent in 2016.

“Combined, this equates to above $300 billion. This has

impacted new projects coming onstream and new discoveries too,”

he affirmed.

He stressed that stability in the oil market today was also vital

for stability in the future, given that the oil industry was very much

a medium- to long-term business.

“Moreover, the industry remains a growth business. We see the

world requiring more oil in the years ahead. Oil will remain a fuel

of choice for the foreseeable future,” he maintained.

In OPEC’s latest

World Oil Outlook (WOO)

, oil was still expected

to supply over 26 per cent of the world’s energy demand by 2040.

Oil demand increased by around 17 million barrels/day between

2015 and 2040 to reach close to 110m b/d, he observed.

“This will require significant investments. And new barrels are

needed to not only increase production, but also to accommodate

for decline rates from existing fields.”

Investment requirements

“Overall, we see oil-related investment requirements of around

$10 trillion over the period to 2040.”

Barkindo asserted that the oil industry needed regular, timely

and sustainable investment to guarantee security of supply to the

global community.

“It is essential for our industry’s future and that of the global

economy. It is essential to all those consumers around the world

who rely on hydrocarbon resources for their everyday needs. And

it will be essential to the future of those currently without access

to modern energy services,” he stated.

In this regard, the OPEC Secretary General contended that it

should not be forgotten that today 2.7 billion people still relied on

biomass for their basic needs and 1.3bn had no access to electricity.


Barkindo told delegates that it was also important to note where

the future supplies were expected to come from. OPEC’s



jected that non-OPEC liquids production would see a recovery in

the medium-term, after dropping considerably in 2016. However,

it would reach a plateau over the next decade, reaching 61.4m b/d

in 2027, before declining to 58.9m b/d by 2040.

“In the long-term, it is OPEC that will be required to meet much

of the expected additional demand,” noted Barkindo.

He said in terms of crude, OPEC’s supply was estimated to

increase to 41m b/d by 2040, an increase of around 9m b/d from

2016, while non-OPEC supply was anticipated to witness an overall

decline of 2m b/d. In terms of all liquids, the increase for OPEC was

close to 12m b/d from 2016, and for non-OPEC there was growth of

about 3m b/d. “It means that the estimated share of OPEC crude in

the total world liquids supply in 2040 is 37 per cent, which is three

percentage points higher than the 2015 level,” the OPEC Secretary

General observed.

To meet their obligations as secure and reliable suppliers of oil

to world markets, he said, OPECMember Countries remained com-

mitted to investing in new capacity and the necessary infrastruc-

ture, despite the downturn the industry had witnessed in the last

couple of years.

“We believe that the recent decisions taken by OPEC and non-

OPEC countries are already creating the favourable conditions for

the industry to deliver the necessary medium- and long-term invest-

ments for our energy future,” he professed.

Barkindo was referring to the landmark and historic decisions

made by OPEC towards the end of 2016 — in Algiers, Algeria, in

September and Vienna, Austria, in November, followed by the

‘Declaration of Cooperation’ with non-OPEC producers, reached in

the Austrian capital in December.

He explained to the audience that since he spoke in London the

last time — at the

Oil & Money

conference in October 2016 — from

the perspective of OPEC and the oil industry as a whole, a lot had

happened. “My discussions back in October 2016 were focused

on OPEC’s Algiers decision adopted at the 170



Meeting of the OPEC Conference on September 28. At this meeting,

Oil sector cannot afford another

year of lost investment — Barkindo