OPEC’s secretary general says continued oil and gas investment needed
OPEC remains focused on being a reliable supplier of oil to global markets but cannot control the global events causing oil price surges, said Secretary General Mohammad Sanusi Barkindo during the CERAWeek by S&P Global conference Monday. “We have no control over current events, as geopolitics have overtaken the market,” Barkindo said. “All we can do is stay the course of our decisions to faithfully implement them and hoping that our political leaders will eventually overcome this historic challenge.”
Barkindo referred to Russia’s invasion of Ukraine as a humanitarian tragedy for Ukrainians and all people, but said he remains cautiously optimistic that political leaders’ intervention will restore stability and peace. Russia joined OPEC+ in 2016, during a cycle that was then believed to be the worst and most unprecedented cycle in history, Barkindo said. At the time, OPEC was not in a position to restore stability to the market, so it reached out to producers outside the group, including Russia and nine other countries. When Covid-19 and more unprecedented events struck, it affirmed how important the established framework was, he said.
Russia’s status in OPEC+. When asked whether OPEC would kick Russia out, Barkindo said the decision to depart a group like OPEC is a severing decision of respective members, and he is not in a position to speak on their behalf.
There is not enough capacity worldwide that would be able to make up for the loss of Russian supply, Barkindo said, adding that at about 7 MMbpd of crude and fuel to global markets, Russia is the second largest exporter of oil and liquids in the world.
OPEC resupply moves and other strategies. OPEC is on its “final stretch” of returning about 5.8 MMbopd to global markets after withdrawing 9.7 MMbopd that it withdrew in 2020 to compensate for the drop in demand amid the pandemic. This is continuing at a rate of 400,000 bopd that will complete the return of 5.8 MMbopd by September, he said.
The focus should remain on decarbonizing hydrocarbons and other sources of energy, as all sources will be required for the foreseeable future, Barkindo said. By 2045, still more than 50% of energy demands will be met by oil and gas, he predicted. “We cannot afford not to continue to invest and produce energy to meet this demand,” Barkindo added. “Oil played its part and will continue to play its part … It’s an oil civilization, and we cannot see, in all projections, where this will diminish.”
When asked if OPEC was concerned about losing market share if the U.S. and Canada ramp up shale exports, Barkindo said he is more concerned about meeting global demand, and at the end of the day, all oil producers are in the same boat.