The world remains in dire need of more oil to ensure future decades of growth, according to what the Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), Haitham Al-Ghais, believes, but Al-Ghais did not hide this in a meeting with “Global Commodities Insight” affiliated with Standard & Poor’s. This week, he was astonished by calls to reduce investment in oil production and refining, at a time when he believes that the world is in greater need of all energy sources.
Haitham Al-Ghais points out that the oil industry needs huge investments, especially in the field of refining and transportation, to be able to meet the increase in global demand for energy and prevent market turmoil, warning against “unrealistic statements, reports and data that do not rely on real information and numbers.”
In his speech, Haitham Al-Ghais returned to OPEC’s openness to constructive dialogue between producers and consumers with the aim of ensuring the stability of energy markets in a way that benefits everyone and the global economy as a whole and ensures sustainable development. He explained how OPEC ’s alliance with a number of producing and exporting partners, led by Russia, Six years ago, he demonstrated, through practical experience, his importance for the stability of global oil markets, and it is expected that this cooperation will continue for years to come.
Haitham Al-Ghais also spoke about the change in oil trade patterns and export trends after the war in Ukraine and Western sanctions imposed on Russia. He pointed out that speculation has increased in the oil futures market, which leads to market fluctuations, and a number of factors that affect the global economy as a whole, which are not related to the fundamentals of the energy market, such as inflation, high interest rates, and the bank collapse crisis in the United States.
Energy agency contradictions
Haitham Al-Ghais refers to the controversy raised regarding the reports and statements issued by the International Energy Agency, which represents the industrialized oil-consuming countries in the West, as he says, explaining that the “OPEC” slogan to which it is committed is dialogue with all stakeholders in the global energy market, including producers, consumers, and stakeholders. But at the same time, the organization must respond to “unrealistic speeches” and “harmful criticism,” he stresses, demanding that messages be based on facts and reflect the actual reality of the energy market, so as not to harm the markets and provoke more turmoil and imbalance.
Actual data and information indicate that the world needs more oil to ensure the growth of the global economy for decades to come, says Haitham Al-Ghais, which makes him personally surprised by calls to reduce investment in oil production and refining, and the Secretary-General of OPEC repeated what he has always pointed out regarding The lack of investment in the energy sector and its consequences on economic growth and ensuring sustainable development. The decline in investment, from his perspective, leads to market turmoil and threatens global energy security.
The need for investments
Haitham Al-Ghais explains that the real crisis is the result of the lack of investment in the field of refining and derivatives, especially in the countries of the Organization for Economic Cooperation and Development. He added, “The last refinery added to the sector with a reasonable production capacity in the United States was the Marathon Company refinery in Louisiana, which began in 1977. During the years 2020 and 2021, the production of up to three million barrels per day of derivatives stopped, most of them in OECD countries. This led to Until the supply of diesel and gasoline became less than the five-year average so far.”
According to OPEC estimates in its latest reports, the refining and transportation sector needs investments of at least $1.6 trillion to prevent any bottlenecks in the energy markets in the coming years.
The Secretary-General confirms that the OPEC countries are among the countries that invest most in the energy industry, especially in the refining and transportation aspect. The matter is not limited to the refining and transportation sector, although it is the most urgent in terms of the need for huge investments, but also the exploration and production aspect needs to be invested in. Investments to be able to provide a supply that meets the increase in global demand, which OPEC estimates this year at about 2.3 million barrels per day.
Haitham Al-Ghais believes that some trends that prevent investment in the oil field, especially by financial institutions that set new rules related to the environment and governance on investment outlets, “need to be reconsidered” because they represent more harm to developing countries that depend on export revenues. Oil and gas to finance economic activity and ensure social stability.
Although investment in the field of exploration and production has improved, finally, with the stability of the markets, the world needs more investments, as Al-Ghais points out, adding that OPEC countries are diversifying their investments in the field of the energy industry and making reasonable investments in the field of modern technology to reduce carbon emissions and in energy sources. Renewable energy.
OPEC+ alliance
In response to a question about the “OPEC” alliance with its partners outside the organization within the “Declaration of Cooperation” known in the media as “OPEC+”, and at the forefront of the countries outside the group is Russia, the Secretary-General said that since 2017 the alliance has proven its importance in maintaining the stability of energy markets. In addition, the decision to reduce production in the fall of last year by about two million barrels per day proved correct, he says.
Haitham Al-Ghais’s speech concluded that, in light of the stability achieved in the market and the benefit for all stakeholders in the global energy market, cooperation between OPEC and its partners, including Russia, continues, and that it is unimaginable what would have happened to the global market if it lost millions of barrels per day of production. Russia of crude oil and derivatives, considering that the world has begun to adapt to changing trends in oil export patterns in light of the sanctions imposed on Russia due to the Ukraine war.
