Opec chief warns of 'dire consequences' if fossil fuels are abandoned

Cutting out hydrocarbons would set the global energy system up to fail, says Haitham Al Ghais

Opec secretary general Haitham Al Ghais says investment is needed in new oil and gas projects. Antonie Robertson / The National

Opec’s chief on Thursday warned of “dire consequences” for the global economy if the world abandoned fossil fuels.

Calls to cut out hydrocarbons “set the global energy system up to fail spectacularly”, Opec secretary general Haitham Al Ghais said.

“It would lead to energy chaos on a potentially unprecedented scale, with dire consequences for economies and billions of people across the world,” he said.

His comments came in response to recent remarks from Fatih Birol, the International Energy Agency’s executive director, who said oil demand may plateau this decade amid the rising development of renewables.

“This is the first time that a peak in demand is visible for each fuel this decade – earlier than many people anticipated,” Mr Birol had said in an op-ed in the Financial Times on Tuesday.

Opec called the IEA head’s predictions “dangerous” and said his claims were not supported by the oil-producing group’s “consistent and data-based” forecasts.

“In past decades, there were often calls of peak supply, and in more recent ones, peak demand, but evidently neither has materialised,” Opec said.

“The difference today, and what makes such predictions so dangerous, is that they are often accompanied by calls to stop investing in new oil and gas projects.”

Global energy heads have been urging governments to invest more in oil and gas projects amid an energy crisis, which has been exacerbated by the Ukraine war.

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.

Opec has estimated that the world needs $12.1 trillion in investment to meet rising oil demand by 2045.

Demand for oil as a primary fuel is expected to increase to 101 million barrels equivalent a day in 2045 from 88 million barrels equivalent a day in 2021, Opec said in its World Oil Outlook last year.

“Cognisant of the challenge facing the world to eliminate energy poverty, meet rising energy demand, and ensure affordable energy while reducing emissions, Opec does not dismiss any energy sources or technologies,” Mr Al Ghais said.

The latest difference of opinion between Opec and the IEA comes as oil prices trade above $90 a barrel following the announcement of extended supply cuts by Saudi Arabia and Russia last week.

In April, Mr Al Ghais said that the IEA should be “very careful” about undermining investment in the oil and gas industry.