OPEC warns against calls to discontinue oil, gas investments

The Organisation Petroleum Exporting Countries (OPEC) yesterday warned against the calls for the discontinuation of investments in the oil and gas industry.

Its Secretary-General, Mr. Mohammed Sanusi Barkindo, said this in his virtual honorary chairman keynote address at the Nigerian Oil and Gas conference in Abuja.

Speaking on the theme: “Global oil market dynamics in a decarbonising world,” Barkindo described the development of renewables energies as a welcome development.

According to him, in the past years there had been headlines over the uncertainty and volatility that the COVID-19 pandemic has brought in relations to climate change and energy transition.

He said, consequently, countries were attempting to adapt to the rapidly-changing dynamics in the energy industry in an effort to adapt and mitigate the impacts of climate change.

Barkindo said “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,” Barkindo said.

Read Also: OPEC: Oil demand to grow by 6mb/d in 2021He added that these voices have emerged particularly in the context of the net-zero 2050 emissions discussions.

The SG submitted that the fact is, however, that oil and gas have an important role to play in the energy transition.

Cautioning against the discontinuation of investment in the industry, Barkindo said: “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 per cent in 2020.

“If this were to continue, we could see demand exceed supply, posing a significant energy security risk to both producers and consumers.”

But, according to him, 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.

He said 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.

Every day, he said, is a challenge to simply put food on the table and earn a decent living wage.

The OPEC boss noted that 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.

Barkindo submitted that “out of the 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”.  He expressed hope that the Petroleum Industry Bill that the Nigerian parliament past last week will attract investors will it becomes a law.

Declaring the conference open, Vice President Yemi Osinbajo said the PIB will receive President Muhammadu Buhari’s timely consideration and assent.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, who represented him said: “Let me assure you, the bill when transmitted to Mr. President for assent would receive the necessary and timely consideration”.

Osinbajo noted that infrastructrural development, security issues, high cost of operation and other issues are well covered in the all encompassing bill.

He expressed hope the law will be the most attractive in Africa when it becomes operational.

In his presentation: “Vision and Priorities for Nigeria’s Energy Transformation”, the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari highlighted some key drivers for future of energy across the globe.

He raised a rhetorical question about investment, saying: “Do we underinvest or overinvest? How do we define the right balance? Energy transition and digital transformation – How quickly would this happen? Are we racing for a divided world – accelerated transiters vs slow transiters.

“How much impact will digitization have on the race to a new order and how do we adequately account or report the progress.

The battle of fuels; natural gas and renewables, will the industry shift to a green portfolio dominated by renewables or use gas as the bridge to the future?”

He noted that in the corporation is a major catalyst for wealth creation and growth, which sees a growing population with much greater growing appetite for energy.

He added: “We see a nation in need of foreign exchange, we see a nation in need of capital to actualise.”

He said NNPC has completed the ELPS Phase II project, thereby expanding the gas footprint for domestic gas utilisation.

Kyari has kick-started the AKK project and would complete the OB3 project.

Continuing, he said: “Our vision is emplacing the critical backbone infrastructure, creating liquidity, and providing the necessary linkage to markets.

“Along with our partners, we are harnessing and exploiting huge gas potentials. The Train 7 by NLNG remains a flagship project expected to increase the nation’s capacity by 35 per cent and sealing Nigeria’s place as one of the top LNG nations in the world. We have also started the process of utilizing LNG locally while deepening domestic LPG penetration.

“In the refinery space, we are rehabilitating and upgrading the existing refineries. The PHRC refinery is on course, while the WRPC and KRPC will start in earnest.

“We would continue to explore and develop new fields albeit at the most optimal cost, and deploying value enhancing novel technologies. We expect that more and more digital oilfields would be developed”.