Bengaluru: Stating that there is chronic under-investment in the oil and gas sector, OPEC's Secretary General Haitham Al Ghais said that investments of USD 12.1 trillion in oil and gas is critical until 2045 for energy security. He said that with global capital moving away from fossil fuels, there is chronic under-investment in the oil and gas sector. Speaking during a panel discussion on 'Price and supply volatility-Addressing global energy security needs' at India Energy Week 2023 on February 6, Ghais said, "Investments of USD 12.1 trillion in oil and gas is critical until 2045 for energy security."
Defending the need for keeping investments flowing into the oil and gas sector for now, the OPEC Secretary General said, "The issue is not the source of the fuel, but emissions. And that is why we need to focus on reducing emissions rather than writing off oil and gas, which are fuels that the global economy does need right now."
"Oil producing nations act yesterday (in the past) to meet demand tomorrow. Oil will still make 50 percent of the global energy mix by 2045. And the need is to ensure that no one gets left behind," said Ghais. Commenting on the OPEC's decision to control production of oil in the recent past, which put developing economies under tremendous fiscal pressure, he claimed that there has been a shortfall of about 5-6 percent in oil production due to a dearth of investments required to produce more oil.
During the same discussion, India called out the cartel of oil-producing nations for controlling the production of oil that led to a rise in global crude oil prices. Former Petroleum Secretary and Advisor to PM on energy matters Tarun Kapoor said that the decision by oil-producing nations to control oil production has hit developing economies the hardest.
"Energy security would ideally mean that everyone should be able to produce enough energy to meet their own demands internally. But that cannot happen because some countries have fossil fuel reserves, while others don't. So when we started trading of energy commodities, we were expecting an open, transparent trade in all energy sources," said Kapoor.
"Suddenly, we came to a situation where countries that produce oil were controlling production, creating a gap between supply and demand, and developing countries were having a hard time buying the expensive oil. These countries started considering whether they should start producing energy domestically, or they should start signing long-term contracts or invest in oil and gas assets overseas," he added.
Commenting on energy security, Minister for Petroleum and Natural Gas Hardeep Singh Puri said, "In a large democracy like India, where 60 million people go to the petrol pump to fuel up everyday, energy security means not having to worry about whether oil will be available or not."
"Energy security means availability, supply, predictability and affordability of energy. At the height of the crisis (the rise in global crude oil prices), we were able to manage because the Central government took a hit and decreased the excise duty to cushion customers," said Puri.
Recounting the steps that India has taken to address the issue of energy security in the backdrop of the volatility in the global crude oil markets, Puri said, "We are drastically increasing the area under exploration and production. We are getting into long-term contracts. We will play the market card and get oil from wherever it is available at the cheapest. And we have drastically speeded up our expansion into the green energy space. That is how we are ensuring energy security," said Puri.
In response, the OPEC Secretary General stressed on the need for maintaining a balance between supply and demand to ensure energy security. "Balance is the right approach in everything. OPEC believes in balance when it comes to energy security," said Ghais. He added that demand is an aspect of energy security which is barely spoken about and there is a need to balance demand with supply.
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