–By HE Haitham Al Ghais, Secretary General, OPEC
Excellencies, distinguished delegates, ladies and gentlemen,
It gives me great pleasure to be here with you to take part in African Energy Week 2022.
I would like to commend my predecessor and my late brother, Mohammad Barkindo, who was a native son and true champion of Africa. His contributions to this continent, to his native Nigeria and indeed to OPEC are too numerous to mention here. But, let us now pause for a moment of silence. Then, we will share with you a special video tribute to this great man and dear friend. (PLAY VIDEO TRIBUTE)
Now, allow me to thank the organizers and sponsors of African Energy Week, in particular NJ Ayuk, Chairman of the Africa Energy Chamber for inviting me to participate in this important event.
I could not think of a more beautiful and pristine location to host an event than this magnificent city of Cape Town. This city’s magical mix of natural beauty, history and sophistication truly set it apart as a world treasure!
African Energy Week continues to go from strength to strength and is now a leading event on the global industry calendar.
I am very pleased to see many of OPEC’s Heads of Delegation participating here, as well as some that are part of the OPEC-non-OPEC Declaration of Cooperation.
I would like to cordially invite you all to attend the OPEC-Africa Roundtable Dialogue, which will take place tomorrow.
I will co-chair this event along with the OPEC President of the Conference, His Excellency Bruno Jean-Richard Itoua. Please do join us.
Allow me to take a moment to thank the President for his ongoing leadership of OPEC during these challenging times, and also recognize the highly successful efforts of the OPEC-non-OPEC Declaration of Cooperation, or DoC, under the leadership of Chairman, HRH Prince Abdul Aziz Bin Salman, Minister of Energy of Saudi Arabia and Alexander Novak, Deputy Prime Minister of the Russian Federation.
The producers of the DoC remain a vital stabilizing force in the global energy markets during this turbulent period of uncertainty and heightened volatility.
The last Ministerial Meeting of the DoC was held two weeks ago, and the OPEC and non-OPEC Heads of Delegation unanimously decided to take a proactive and pre-emptive stance in their efforts to foster a sustainable stability in the global markets.
With macroeconomic headwinds forecast for the months ahead and the very real potential for a global recession, there was a consensus among the Ministers regarding the need to act now to prevent a crisis later.
I want to thank our African Heads of Delegation for their ongoing support of these global efforts to stem the tide of volatility and to promote a lasting stability in the market.
OPEC has more than six decades of experience in navigating the ups and downs of the global oil market, and one thing is clear – our actions in the short term most certainly have an impact on the longer term.
On the 31st of October, we will be launching our 2022 World Oil Outlook at ADIPEC in Abu Dhabi. This annual flagship publication provides a detailed overview of our most recent long-term forecasts for the energy markets. I would like to cordially invite all of you who will be at this year’s ADIPEC in Abu Dhabi to join us for this special event.
Allow me to just highlight a few key points from the WOO that are relevant to our discussions today.
Firstly, demand for energy will continue to rise dramatically. We forecast that global energy demand will increase by 23%, from 286 mboe/d in 2021 to reach 351 mboe/d in 2045.
Despite a minor decline, oil will retain the largest share of the energy mix by 2045. The combined market share of oil and gas in the global primary energy mix is expected to remain above 50% to 2045. Nearly 71% of this demand will come from non-OECD countries, predominantly in Asia, but also from Africa.
Another key issue is the dire need for increased industry investment. Cumulative oil-related investment requirements from now until 2045 are estimated to total $12.1 trillion. Of this, $9.5 trillion will go to upstream projects, $1.6 trillion to the downstream and $1 trillion to the midstream.
If these investment needs are not met, we could eventually see a supply shortfall, resulting in heightened volatility. And, let me add here, that our efforts through the Declaration of Cooperation are aimed at providing stable energy markets, which, in turn, are a pre-requisite for investor confidence and increased investment going forward.
The WOO also covers another key topic, which is highly relevant to Africa, and that is the urgent need to reverse the trends contributing to energy poverty.
It is a sad fact that, as of 2020, roughly 733 million people were still without access to electricity, and about 80% of these are here in Africa.
On top of this, approximately 2.4 billion people, or nearly one-third of the global population, still had no opportunities for clean cooking solutions. I should add here that in Sub-Saharan Africa, 920 million are still without access to clean cooking fuels, an increase from 750 million in 2010.
This is simply unacceptable. I call on world leaders to unite and to mobilize their collective resources and political support to help reverse this tragic situation and bridge the gap between developed and developing countries.
OPEC supports the first-ever universal goal related to energy, SDG7, which seeks to ensure access to affordable, reliable, sustainable and modern energy for all.
I think you would all agree that access to energy, like education and health care, should not be considered a luxury but a basic human right.
OPEC will continue to work closely with our Member Countries to advocate for real and lasting change on this issue.
And finally, the overarching issue of climate change and the ever-evolving energy transition will have massive implications for Africa.
Countries around the world continue to adapt to the rapidly changing dynamics in the energy industry in an effort to mitigate the impacts of climate change.
In this context, Africa is unfortunately in a fragile position. In addition to suffering serious economic setbacks due to the fallout from the COVID-19 pandemic, African countries stand to be on the losing end of the consequences of climate change.
Unfortunately, the inequalities that were already in place previously are now in danger of being amplified.
Thus, going forward, OPEC will continue to advocate for a balanced, equitable and inclusive energy transition that leaves no one behind. And OPEC will continue to advocate for Africa!
COP27, which will take place next month in Egypt, will provide a strategic platform for OPEC’s Member Countries to advocate for a balanced and fair process on issues related to adaptation, mitigation and the means of implementation, particularly climate finance and technology.
As an industry, we must approach these critical issues together through dialogue and cooperation, ensuring that all voices are heard and all viewpoints are considered.
Simply said, there is no “one size fits all” solution. Different countries around the world have varying capabilities and diverse needs. Thus, reducing emissions should have multiple paths, as set out by the Intergovernmental Panel on Climate Change (IPCC), and all of them should be considered as potential options.
Additionally, it is important to remember that any future energy and climate roadmap will need to be developed in accordance with the core principles of the United Nations Framework Convention on Climate Change, namely equity, historical responsibility and the principle of common but differentiated responsibilities and respective capabilities. This will be crucial, particularly for Africa, to ensure that its unique circumstances are taken into consideration.
Excellencies, ladies and gentlemen,
I want to conclude with a few words on Africa’s key role within OPEC and its contributions to the wider oil and gas industry.
With seven Members — Algeria, Angola, Congo, Equatorial Guinea, Gabon, Libya and Nigeria – Africa makes up more than half of OPEC’s overall Membership.
This increasing presence of Africa within OPEC led to the establishment in June of 2021 of the first-ever High-level Meeting of the OPEC-Africa Energy Dialogue.
This highly successful event is the latest in OPEC’s portfolio of global energy dialogues, which include the European Union, Russia, China, India, US independent producers, the GECF, in addition to other international organizations and corporations.
Through this Dialogue with Africa, we look forward to enhancing our focus on the continent and its promising energy future.
And indeed, the future of Africa’s oil industry is bright and the opportunities are vast. Home to five of the top 30 oil-producing countries in the world and several top gas-producing nations, the continent’s precious resources will continue to be highly sought after in the long-term horizon in order to meet the rapidly rising global demand for oil and gas.
As of 2021, Africa was estimated to have proven oil reserves amounting to around 120 billion barrels. As far as production levels go, as of 2019, the continent produced 8.5 mb/d of oil, which is around 9% of world output.
On the demand side, developing regions, including Africa, with its rapidly growing population and dynamic demographical shifts, will make up the majority of the world’s consumption. And all forms of energy will be needed, not only to support the post-pandemic recovery but to satisfy longer-term energy requirements.
In terms of the downstream sector, the oil demand shock caused by the COVID-19 pandemic resulted in numerous refinery closures worldwide, including Africa, and we continue to see fallout from this crisis.
However, we forecast 7.3 mb/d of refinery capacity additions in the medium term, mostly in the Asia-Pacific, the Middle East and Africa. Of this, Africa is expected to expand refining capacity by 1.2 mb/d.
In terms of the long-term outlook, we expect to see a total of 15.5 mb/d of refining additions globally, of which 90% will come from the Asia-Pacific, the Middle East and Africa.
These overall positive developments in the African downstream will help increase local refined product output while reducing product imports from other regions.
There are also excellent opportunities for enhanced inter-African trade and for increased cooperation among continent’s National Oil Companies in both the downstream and upstream oil and gas sectors.
Additionally, the Declaration and Charter of Cooperation provide excellent opportunities in this regard to help expand partnerships with non-OPEC producers in business, trade, research and development, technology and on other key collaborative efforts.
Excellencies, ladies and gentlemen.
Despite the many challenges that lay ahead, we will continue to see Africa’s energy industries thrive and grow in the decades to come.
I cannot stress enough the need for enhanced energy cooperation at all levels and amongst all stakeholders.
The Declaration of Cooperation continues to be the torchbearer for multilateral energy cooperation, but I would like to urge all stakeholders here in Africa and around the world to join us as, together, we seek to achieve a lasting stability in the global energy markets.
This is the only way we will be able to enable renewed investment in the industry and support the further development of our economies.