OPEC: Oil industry needs to increase capacity investment to avoid wild swings

OPEC: Oil industry needs to increase capacity investment to avoid wild swings

The secretary general of the Organization of the Petroleum Exporting Countries (OPEC) said this week that the global oil industry needs to invest in increased production capacity and new production so that oil markets can avoid sharp future volatility.

He made the remarks in an exclusive interview with the Emirates News Agency (WAM) on the sidelines of the ADIPEC Energy Conference in Abu Dhabi. In the interview, he stressed the importance of increasing investment in the oil industry.

He said a sharp drop in investment in the oil industry had added to volatility in the oil market, which began with a price crash in 2015 and then resurfaced in 2020 with the first wave of the pandemic.

He told WAM that prior to 2016, the oil industry was investing more than $500 billion a year, but it has been declining since then, leading to a drop in production capacity.

He said global spare capacity is currently very low and is in the hands of two major producers, Saudi Arabia and the United Arab Emirates.

He reiterated recent rhetoric from Saudi Arabia and other major oil producers that the current energy crisis is the result of years of underinvestment in oil and gas.

Saudi Aramco Chief Executive Amin Nasser said in September that years of underinvestment in oil and gas production are the main cause of today's energy crisis, and that the small amount of remaining oil capacity that remains will be left when the global economy rebounds from the current slowdown. was exhausted. Oil and gas investment more than halved between 2014 and 2021, Nasser said, adding: "This year's global investment increase is too little, too late, and too short-term."

"These are the real reasons for this state of energy insecurity: underinvestment in oil and gas; options not ready; and no backup plans," Nasser said in September.

At the ADIPEC meeting held this week, OPEC released the 2022 edition of the World Oil Outlook report, saying that "all forms of energy will need to meet future energy demand" and that by 2045, oil will account for 10% of the energy mix. The share will remain the largest, at nearly 29% by then. OPEC's outlook report also shows that by 2045, the global oil industry will need a cumulative investment of $12.1 trillion in upstream, midstream and downstream, equivalent to more than $500 billion a year.