The Secretary-General of the Organisation of the Petroleum Exporting Countries (OPEC), Mohammad Barkindo, has warned of a bleak future for the oil and gas industry, if nothing was done to address the threats besieging the sector from multiple fronts.
Barkindo, in his keynote address on Tuesday at the ongoing 2022 Nigerian Oil and Gas (NOG) Conference with the theme, ‘Funding the Nigerian Energy Mix for Sustainable Economic Growth’, noted that the oil industry was affected by severe challenges from multiple fronts which were threatening investment potential in the short and long terms.
He said: “Your industry is now facing huge challenges along multiple fronts, and these threaten our investment potential now and in the future. To put it bluntly, the oil and gas industry is under siege.
“For starters, the evolving geopolitical developments in Eastern Europe, the ongoing war in Ukraine, the COVID-19 pandemic and inflationary pressures across the globe have come together in a perfect storm that is causing significant volatility and uncertainty in the commodity markets, more importantly, in the world of energy.”
The OPEC boss disclosed that a number of industrialised countries and multilateral institutions have continued to pursue stringent policies aimed at accelerating the energy transition and fundamentally altering the energy mix.
According to him, the industry had not fully recovered from the enormous investment losses of recent years, stressing that “in a very short timespan, the industry has been hit by two major cycles- the severe impact of the market downturn in 2015 and 2016, and the even more far-reaching impact of the COVID-19 pandemic.”
“Looking further down the road, OPEC’s most recent World Oil Outlook give us some perspective on what is to come. It shows the global oil sector will need cumulative investments of $11.8 trillion in the upstream, midstream and downstream through to 2045 to meet expectations for the significant growth in energy demand,” he added.
Barkindo further enjoined national oil companies to have predictable and unfettered access to investment capital, saying regular investment at adequate levels was the lifeblood of the industry, if they must continue to innovate and flourish.
He said: “NOC’s must develop new technologies, strengthen human capacity and remain leaders in innovation so that they can do their part to meet the world’s growing need for energy, shrink overall environmental footprints, and expand access to under-served communities.”
Also speaking at the event, the Minister of State for Petroleum Resources, Timipre Sylva, said fossil fuel would always have a share in Nigeria’s energy mix for the foreseeable future, noting that the country would abandon fossil fuel, while the nation had adopted its vast gas resources as transition fuel.
“With proven gas reserve of over 200 trillion cubic feet, the right policies and regulations to expand the utilization of her gas resources, Nigeria has huge potential to become an industrialized nation,” the minister said.
Sylva stated that the shift to gas underscored the seriousness and determination of President Muhammadu Buhari in the development of Nigeria’s huge gas resources as a major gas exporting and consuming nation.
He said: “Our government is working on many initiatives to tackle theses challenges, one of which is the gas to power initiative aimed at minimising gas flaring and harnessing our gas resources to electricity to meet Nigeria’s electricity demands.”