The Organisation of Petroleum Exporting Countries (OPEC) yesterday described the International Energy Agency (IEA) postulations which include the stoppage of investment in new fossil fuel supply after 2021 as catastrophic to the world.
OPEC’s Secretary-General, Dr. Mohammad Sanusi Barkindo, lamented that the Environmental, Social and Governance (ESG) of the global energy industry criteria were being written without a consideration of the developing countries unique situation.
Nigeria is one of the oil producing nation that is also a developing country.
He made this known in his virtual speech at the 14th Nigerian Association for Energy Economics Annual International Conference, in Abuja.
The theme of the conference: ”Strategic responses of the energy sector to COVID-19: impacts on African economies.”
The OPEC scribe said: “We are also greatly concerned about increasing pressure on the oil industry coming from many sides, including decision-makers, along with investors.
“Even within the boardrooms of oil majors, the push is strong to strive for policies and initiatives that could have a drastic negative effect on oil-producing countries.Oil is the lifeblood of our country, thus the importance of this issue cannot be underestimated.
“The ESG criteria are being written without considering the unique circumstances of developing countries.This was seen recently in a Dutch courtroom; Royal Dutch Shell was ordered in a landmark case in May to reduce global carbon emissions by 45 per cent by the end of 2030 compared with 2019 levels – extraneous to the provisions of the UNFCCC and the Paris Agreement.’’
He told the participants at the conference that the IEA released in May a publication entitled: ‘Net Zero by 2050’, meant to support the UK government’s COP 26 Presidency.
According to him, the publication focuses on emissions to the exclusion of demand and supply, which raises many questions related to implementation and possible implications.
Barkindo said: “It suggests milestones such as: no need to invest in new fossil fuel supply after 2021; no new sales of fossil fuel boilers after 2025; 60 per ment Environment NGOs have secured support from investors to install international oil company board members with a stronger focus on climate.
The Secretary-General said: “There has been a blanket rejection regarding new investment in the fossil fuel industry by investors, and climate-related risk disclosures are to be included as legal requirements.”
He noted that the postulation is that primary energy demand should drop by 7 per cent below 2020 figures, though the economy would be twice as large and the world’s population 2 billion peoplegreater.
He added that naturally, a massive drop in oil demand would be expected to follow.
Barkindo, however, warned that “these postulations would be catastrophic to the economies of oil-producing developing countries and by extension the world at large.”
According to him, litigation will continue and may expand to oil-producing developing countries.
He insisted that “We need to help steer the global conversation and influence policymakers to
understand the folly of this direction; tap into all technology available to reduce GHG emissions; work together with IOCs to present a common case in litigation; and engage in multilateral platforms,
including the UNFCCC, to present oil-producing developing countries’ position.
“We must face these
challenges head-on in a unified manner.”
He said the theme is very timely, considering the dual challenges facing oil-producing developing
countries — the pandemic along with the energy transition.
On energy transition, he said oil will remain the largest contributor to the energy mix to 2045 with more than 27 per cent, according to the latest OPEC World Oil Outlook. He further noted that renewables are developing most rapidly, but at the same time, the world’s economy is set to double and all resources will be required to meet this growing need.
Barkindo said “Cumulative investment of $12.6 trillion in the upstream, midstream and downstream is crucial through to 2045 in order to meet this need.
“Investment in 2020 dropped by more than a whopping 30 per cent in the face of COVID-19, even worse than the dramatic declines seen in the severe 2015-2016 industry downturn.”
Read Also: OPEC increases Nigeria output to 1,829,000mb/d from April 2022
He warned that the energy security risk that would result from too little investment would heavily impact both producers and consumers.
Barkindo projected that “Oil-producing developing countries, like Nigeria, would be particularly hard hit.”
He noted that History has shown that energy insecurity brings with it economic insecurity and geopolitical instability.
He urged all OPEC Members, including Nigeria, will have to re-
strategize to maintain their positions in the new global
energy mix, including focusing on economic diversification.
The OPEC scribe urged that Oil-producing countries, and in particular African countries that rely on oil and gas production for revenues, must create an investment friendly climate —
to this end, the PIB promises to be a huge success in reviving the fortunes of the oil and gas industries in Nigeria.
He said a reduced foreign direct investment into Africa’s industry could be catastrophic for many countries and peoples. Barkindo noted that oil is the mainstay of Nigeria, contributing
robustly to the country’s total revenue and foreign
exchange earnings.
He insisted that “Any shocks to this essential commodity affect the country’s entire economy.
“OPEC helps buffer these shocks. With stability, the country
can plan its economy with certainty and clarity.”
He urged the participants to keep in mind the principal behind the Sustainable Development Goals, including SDG 7 on energy, to leave nobody behind.
According to him, oil is essential in forwarding economic advancement and alleviating poverty. We cannot forget that energy poverty continues to disproportionately impact millions across Africa.
He revealed that OPEC data show that an estimated 47 per cent of Sub-Saharan Africans have no electricity and 85 per cent lack access to clean fuels and technology for cooking.
Barkindo said “access to energy enables development and must be
viewed as a human right. “Additionally, the inequalities, which were in place before the pandemic stand to be amplified. “We must build resilient, sustainable, equitable and inclusive societies in the face of the
energy transition.
“Oil has a powerful role to play in the energy transition, and it should not be swept under the rug based on old credentials. With the help of technology, our industry can become low carbon or even zero-carbon.
“This includes technologies already being implemented such as
carbon capture, utilisation and storage. Additionally, great strides have been made in efficiency gains in the industry, along the entire production chain.
“It is essential that one compare the lifetime credentials
of each source of energy in terms of emissions.
“ For example, electric cars may appear cleaner, but emissions
are buried in many of the industrial process required to
produce them.
“We applaud Nigeria’s goals to reduce carbon emissions while pursing the UN SDGs, which seek to achieve access to affordable, reliable, sustainable and modern
energy for all.
“Transitioning to a low-carbon energy future may seem to run counter to the socio-economic benefits of energy, in particular to energy-poor countries.
Nigeria is attempting to tackle this challenge head-on with the strong promotion of solar and wind energy,and expansion in the use of natural gas.
“ Our member countries are investing in the development of renewables to meet current and future demand for energy, using all sources efficiently.”
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