The UAE’s Energy Minister on Thursday said he was more concerned about the supply of crude oil than demand amid ageing oilfields and underinvestment in new projects.
The world consumes more than 100 million barrels per day of crude and about 8 million bpd of production needs to be replaced every year but the current level of investment is not sufficient, Suhail Al Mazrouei, Minister of Energy and Infrastructure, told the Opec Seminar in Vienna.
“The pace of growth [in crude] demand in the past 10 years was between 1 to 1.5 per cent every year … now it’s 2 per cent,” Mr Al Mazrouei said.
“We heard the story of peaking demand five years ago [and even] 10 years ago.”
The International Energy Agency expects global oil demand growth to slow significantly by 2028, as high prices and supply concerns hasten the shift to cleaner energy.
In a report last month, the Paris-based agency also said “peak oil demand” could be in sight before the end of the decade.
Opec+, an alliance of 23 oil-producing countries, “knows better” because it represents 40 per cent of the world’s production, Mr Al Mazrouei said.
At the event, energy companies blamed policymakers and politicians for the current underinvestment in the industry.
International oil majors have reduced spending over the past few years amid increasing pressure from governments and institutional investors.
The policies “do not make sense”, the chief executive of UAE’s Crescent Petroleum said during a panel session on Thursday.
“It’s like trying to solve obesity by cutting off loans to farmers and doing nothing about the restaurants and supermarkets,” Majid Jafar said.
Choking off oil and gas supply is causing more frustration in Asia and Africa, while making it harder to achieve basic needs and services, he added.
Bernard Looney, chief executive of BP, said the events of the past couple of years show that energy is the “lifeblood” of the society.
The world must build a cleaner energy system, but that can only be done by ensuring energy security and affordability, Mr Looney said.
“At the same time, we must invest in the energy system of today and if we don’t invest in that, we will have a mismatch in demand and supply,” he said.
Oil and gas upstream capital expenditure rose by 39 per cent to $499 billion last year, the highest level since 2014, according to the International Energy Forum.
However, annual upstream spending needs to increase to $640 billion by 2030 to ensure adequate supplies, the IEF has said.
“We need energy to fuel our growth and some idealists tend to forget that there are burgeoning economies south of the equator and east of the Suez,” said Tengku Taufik, chief executive of Malaysia’s Petronas.
“We need a non-binary approach to energy security. You are not going to have a successful energy transition without energy security.”