Global economic growth hinges significantly on uninterrupted energy supplies.
For this reason, hydrocarbons, specifically the cleaner, abundant, and cheaper natural gas will play a key role in powering the world’s economic growth for some more years to come.
But it is quite obvious that the structure of the energy mix is becoming more diversified thanks to the expansion of renewables. However, fossil fuels are projected to remain dominant, accounting for 71% in 2050.
Depriving investments from the oil and gas industry will have an adverse impact on the sector, resulting in a spike in prices and inconveniencing buyers around the world.
Even as oil prices gradually recover, the required investments to meet future demand and replace production from mature fields are not being made, threatening a supply and price shock in the long run.
Due to the impact of Covid-19, 2020 will have seen the largest decline in energy investment on record, a reduction of one-fifth – or almost $400bn – in capital spending compared with 2019, according to International Energy Agency.
Oil (50%) and electricity (a further 38%) were the two largest components of worldwide consumer spending on energy in 2019. However, IEA estimates that spending on oil would have plummeted by more than $1tn in 2020, while power sector revenues drop by $180bn (with demand and price effects accompanied in many countries by a rise in non payment).
In his remarks at the St Petersburg International Economic Forum in the Russian Federation, HE the Minister of State for Energy Affairs Saad bin Sherida al-Kaabi cautioned against being driven by an over-excited euphoria that envisages depriving investment from the oil and gas sector.
Al-Kaabi cited a recent International Energy Agency report which called for stopping investment in oil and gas and said: “When we deprive the oil and gas sector from additional investments, you will have big spikes in oil and gas prices in the next few years which will deprive customers and nations from oil or gas and all the byproducts that come with it. This is a dangerous discussion that will harm humanity and about a billion people around the world, who don’t have electricity today.”
Stressing the importance of a responsible discussion about the much needed energy transition, al-Kaabi, also the President and CEO of Qatar Petroleum, said: “We all have a responsibility to produce in a more environmentally sensitive way. We are using the best available emissions abatement technology, we are monitoring methane emissions to arrest it, and we are using carbon capture and sequestration.”
Energy transition is coming, it’s happening, but its space will depend on a number of questions and a number of different issues, said Alexander Novak, Russia’s Deputy Prime Minister and former Energy Minister of Russia and noted: “We must not discount conventional energy sources, which are going to stay with us for a while yet.”
Clearly, investments in exploration projects all over the world have been depleted. The global energy market will see its impact in the coming years.
A lack of investment in oil projects will likely come back to bite the energy market.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
FM affirms unified Arab position on the Renaissance Dam crisis
A digital bridge to social support
Global impact: Fewer CDN players with wider reach
Geneva calling: Where they disagree and where they might compromise
Of peanuts and monkeys
Djokovic reignites GOAT debate after? French Open win
What’s the point of Olympics?
G7’s billion vaccine plan counts some past vows, limiting impact
The paradoxes of the Bangladesh miracle