IEA chief warns geopolitical pressures increasing 'by the day' a challenge to energy security

Fatih Birol tells The National he expects further downward pressure on oil prices

Fatih Birol, executive director of the IEA, speaks at a press conference on day two of the Future of Energy Security Summit. AFP

The executive director of the International Energy Agency, Fatih Birol, has called for international collaboration to ensure energy security at a time of two major risks. The first is posed by the traditional challenges to oil and gas energy supplies and the second, more recent, is securing critical mineral supplies, he said.

Diversification is important

Fatih Birol

In an interview with The National, Mr Birol highlighted the need to find common ground between countries, at a time when “the geopolitical fragmentation is really increasing”.

“The winds are blowing not in the direction of international co-operation but fragmentation,” he emphasised.

Mr Birol warned that “no country is an energy island … a country alone cannot solve this energy problem”.

While he did not name any particular country responsible for that fragmentation, US administration policies and the threat of trade wars are affecting oil prices globally.

The IEA chief hosted a two-day Summit for the Future of Energy Security with the UK government, which concluded on Friday afternoon.

IEA executive director Fatih Birol during the Future of Energy Security summit. EPA

Speaking to The National on the second day, Mr Birol said that the summit was a “big success”, with 60 countries from five continents and major oil companies including ExxonMobil, Adnoc and Shell represented.

“We have about 15 oil exporters, major renewable producers, major critical minerals owners, copper, lithium, zinc,” he added.

The attendance list had obvious omissions, including China. Commenting on China’s absence, Mr Birol said: “It was a scheduling conflict. I will meet them in a few days.”

The energy industry is pivoting more towards fossil fuels since the election of Donald Trump as US President. However, new US tariffs have also led to uncertainty about the global economy. Amid the volatility of oil prices, Mr Birol expects subdued oil prices to continue to fall. “Oil prices may see further downward pressure because of the uncertainty of trade wars,” he said. If the current trajectory remains as it is, he expects “global oil demand will be impacted in a negative way”.

British Energy Secretary Ed Miliband, left, and IEA executive director Fatih Birol at the Future of Energy Security summit in London. EPA

“An uncertain global economy and the trade wars are making economic outlook much more uncertain and weak,” Mr Birol said.

He added that “oil and gas will be with us for years to come”. Immediate risks include problems with delivering supplies through the Red Sea, due to the threat of attacks from the Houthi rebels in Yemen.

On how to handle those threats, Mr Birol said there are “mechanisms which can in limited ways address some shortfalls, but [ultimately this] needs structured solutions, maybe military solutions, to open up these trade routes”.

Mr Birol also sees economic realities as indicating that renewables are now a powerful force.

“A lot of solar and wind coming to market” is not necessarily because of climate action, but rather economic dynamics, Mr Birol said. “They are cheap. It is coming from China, in the Middle East, in Asia, in Latin America, in Europe”.

He highlighted that, of all the power plants installed in the world, 85 per cent use renewable energy.

Government and industry representatives from around the world attend The Future of Energy Security summit. AFP

“This is mainly because of the economics. Renewables are no more a romantic story, it is an economic reality,” Mr Birol said.

Yet, electrification and renewables are also facing security threats, with a concentration of renewables in a few countries. The IEA is being careful not to come across as targeting one country or another when raising the issue of critical minerals risk. Mr Birol said the issue is one of supply chains, which can face technical or natural disaster threats, in addition to geopolitical ones.

“We agreed that it may be not a good idea to put all the eggs in one basket. Diversification is important,” the IEA chief told the summit.

He told The National that those convened in London agreed that, “the future of the energy security will critically hinge on not only paying attention to traditional security risks [to sources] such as oil and gas, but also and critical minerals mining and manufacturing”.

That will include initiatives between the countries that have critical mineral resources in Latin America, Africa and elsewhere, and countries willing to invest in mines and the refining and processing centres in those countries.