…Says world to attain 100mb/d oil consumption sooner than projected
06 June 2018, Sweetcrude, Lagos – Secretary-General of the Organisation of the Petroleum Exporting Countries, Dr. Mohammad Barkindo, has stated that the oil and gas industry is not seeing enough robust investment in long-cycle projects.
But, he maintained that the world would likely attain 100 million barrels per day, mb/d, oil consumption sooner than earlier projected.
In his keynote address titled ‘Oil market perspectives beyond the short term’ at the 25th International Caspian Oil and Gas Exhibition and Conference in Baku, Azerbaijan, obtained by SweetcrudeReports, Barkindo disclosed that although investment had gradually picked up in 2018, the industry is not seeing enough robust investment in long-cycle projects, which he described as the “baseload” of future supply, and the foundation of the industry’s future.
He revealed that in the period to 2040, the required global oil sector investment is estimated at $10.5 trillion to meet future world oil demand projected to surpass 111 million barrels a day by 2040.
The OPEC chief, who stated that the projected 111 million barrels a day world oil consumption represented a staggering increase of 16 million barrels a day, added that the estimated $10.5 trillion to meet the future demand indicated a clarion call that every effort be made to avoid a supply gap.
“The world will attain the 100 million barrels a day level of consumption much sooner than projected.
“This is a clarion wake-up call that every effort should be made to avoid a potential supply gap that could present a serious challenge to the industry in the medium to long-term,” he said.
The wake-up call, according to the OPEC scribe, was essential not only to maintain current production levels under given natural decline with compensation needs at 4% to 5%, but also to ensure a steady flow of oil to meet rapidly growing demand in the long term.
“It will also be a key foundation for future global economic expansion”, he added.
Barkindo also provided an explanation to market yearnings on how OPEC intended to sustain the Declaration of Cooperation, DoC, voluntarily entered into by 24 countries late 2016.
“With the Declaration of Cooperation, we have initiated a new era in international energy collaboration, the likes of which the world has never seen before. What is required is to build upon this model process. We must institutionalise it and expand it even further for a sustainable market stability beyond the short term.
According to him, success at handling the next phase of the DoC will lead to market rebalancing, a gradual recovery in investments and the return of confidence in the industry.
Going forward, he said such will be achieved through a broader and institutionalised framework of cooperation based on the Declaration’s core principles of equity, fairness and transparency.
“We will look into developing metrics and designing mechanisms to help govern against future shocks and extreme volatility in the market”, he added.
As the implementation phase continues to advance, Barkindo said OPEC and its partners will take stock of the successes accomplished so far, as it steps back and considers the larger picture and the perspectives over the medium to long-term.
“One of the greatest and most pressing challenges before us is ensuring that there will be adequate levels of investment in a predictable fashion to meet the world’s future requirements,” he said.
Barkindo stated that although investment had gradually picked up in 2018, the industry is not seeing enough robust investment in long-cycle projects, which he described as the “baseload” of future supply, and the foundation of the industry’s future.