On October 31, OPEC released the World Oil Outlook 2022. In this report, OPEC raised its estimate of global medium – and long-term oil demand. At the same time, OPEC said that despite the fierce momentum of energy transformation, the oil industry still needs $12.1 trillion of investment to meet the global energy demand.
01. Continued growth in demand
In recent years, with the global climate problem becoming increasingly prominent, the International Energy Agency (IEA) has always called for active energy transformation and proposed to stop fossil energy investment by 2050. In its annual report released last week, IEA said that because the energy crisis triggered by the Russian Ukrainian conflict has accelerated the global transformation to green energy, global fossil fuel consumption is expected to peak or stabilize in the next decade.
However, OPEC insists that global oil demand will keep growing in the next decade, and says that the world cannot live without oil and more investment is needed in new oil production.
In the OPEC World Oil Outlook 2022 report, OPEC raised the global oil demand forecast for 2023, medium term and 2045, and raised the demand forecast for 2025 from 103.6 million barrels per day to 105.5 million barrels per day. The demand forecasts for 2040 and 2045 were raised to 109.8 million barrels per day from 108.1 million barrels per day and 108.2 million barrels per day, respectively. OPEC said that the world oil demand will be stable after 2035. It is estimated that by 2045, the total investment in the oil industry will reach 12.1 trillion US dollars, higher than the expectation in 2021.
According to the research estimate of OPEC, from now to 2025, the global population will increase by 1.6 billion, 96% of which will occur in developing countries, which will promote the demand for oil in these countries. This means that in the next few years, with the population growth and economic prosperity of developing countries, the demand for oil will soar, and more investment in new oil production is needed. The demand for oil in the next few years will be stronger than expected.
OPEC said that in the next few decades, although the proportion of renewable energy in the global energy supply will increase significantly, fossil fuels such as oil, coal and natural gas will still dominate.
OPEC believes that as the output of competitors decreases, the growing oil demand will be mainly met by OPEC itself. By 2035, OPEC’s oil supply will climb to 38.3 million barrels per day from the current 31.6 million barrels per day. Ten years later, this figure will continue to rise to 42.4 million barrels per day.
02. Urgent need to increase investment in the oil industry
OPEC believes that oil investment has been “unnecessarily demonized” and warns that “long-term insufficient investment” in oil supply may aggravate the global energy security crisis. The Secretary General of OPEC, Haitham al Ghais, said: “It is important for us to understand the advantages and disadvantages of each kind of energy, because we want to find the answers to the questions related to energy affordability, energy security and the need to reduce emissions. We must make full use of all options, all solutions and all technologies.”
Haitham Al Ghais wrote in the foreword of the report: “By 2045, the total investment in the oil industry will be 12.1 trillion dollars.” The report said that this figure was higher than last year’s estimate. “However, due to the downturn in the industry, the COVID-19 and the policy centered on ending the financing of fossil fuel projects, the long-term underinvestment in the global oil industry in recent years is the main reason for concern.”
Post time: Nov-10-2022