Mohammed Barkindo, secretary general of the Organization of Petroleum Exporting Countries (OPEC), has expressed concern over the powerful cartel that gives rise to the continued instability in the international oil market.
He said their actions have impacted on the ability of the oil producing countries to raise about $10.5 trillion in investments required to meet projected world oil demand of over 100 million barrels a day by the year 2040.
Barkindo made the disclosure in a keynote presentation in Abuja on Monday at the maiden Nigerian International Petroleum Summit.
He said the current topsy-turvy nature of the global oil market, which began in 2014, needed a drastic and permanent cooperation between OPEC and other oil producers around the world to restore and maintain market stability.
“Preliminary global energy demand is expected to increase by 35 percent by 2040. Correspondingly, long-term oil demand is expected to increase by 15 million barrels a day, rising from 94.5 million barrels per day in 2016 to about 111 million barrels per day in 2040,” he said.
“The majority of this rising demand will come from our own part of the world, from the developing world, increasing by almost 24 million barrels a day to reach 67 million barrels a day by 2040.
“World consumption is on course to exceed 100 million barrels a day, much earlier than projected.
“It is also important to note that to meet the projected increase in global oil demand, investments worth an estimated $10.5 trillion will be required.”
According to Barkindo, this underscores the absolute necessity of a sustainable and stable oil market, producing to encouraging the tide of long cycle investments necessary to preventing supply reduction in the future.
He noted that the oil price crash of mid-2014, from all-time high of $120 per barrel to below $30 a barrel, was devastating such that all hands must be on deck to prevent a re-occurrence.
“In fact, our OPEC difference basket price, fell by an extraordinary 80%, between June 2014 and January 2016. Investments were also chopped off with exploration and production spending falling by enormous 27% in both 2015 and 2016,” he said.
“Additionally, nearly $1 trillion in investments were frozen or discontinued and many thousands of high quality jobs were lost. A record number of companies in our industry in several parts of the world also filed for bankruptcy. Our industry was on life support, and a relevant breakthrough was necessary to revive it.”
Ibe Kachikwu, Nigeria’s minister of state for petroleum resources, also expressed concern over the dwindling fortunes from oil and conversely, the high cost of producing the commodity in Nigeria.
“The reality is that today, if you cannot produce cheap cost oil, if you cannot diversify the processing of your oil; if you cannot look to internalising and externalising investment in the sector; if you cannot capture the requisite technological skills that are essential to help you operate efficiently, you are lost before you start,” the minister warned.