The Secretary-General of the Organization of Arab Petroleum Exporting Countries (OAPEC), Ali Bin Sabt, is quoted as saying the organization has warned of the danger of declining investments in the area of exploration and production and spoke of the importance of pumping investments into the petroleum industry in general, and exploration and production in particular, to strike a balance in energy around the world.
This is in addition to maintaining stable production to meets global demand and face off fluctuating sources of supply in emergency situations, especially geopolitical changes, reports a local Arabic daily.
Bin Sabt added in a press statement that in the context of the declared confrontation after the outbreak of the Russian-Ukrainian crisis, it recently called on most of the European Union countries, in cooperation with the United States of America, to stop using Russian oil and search for alternative countries to compensate for their imports.
Bin Sabt said that within the frantic European-American endeavors in this field, the oil markets responded with a noticeable rise in the prices of oil, gas and oil derivatives, which created great pressures that the current US administration did not find an outlet except by trying to throw the ball into the court of the other, as the Judicial Committee of the US Congress passed a draft law called NOPEC , a law directed at members of the Organization of Petroleum Exporting Countries (OPEC), whose first formula was put in place in 2000 in an effort to lift the immunity of national oil companies in (OPEC) countries.
The aim of the bill is to empower the US Department of Justice from taking legal action against these companies under the American anti-monopoly law, under the pretext of “trying to reduce the supply of oil, and its impact on prices.
Bin Sabt noted that different versions of the bill have been presented and discussed in the US Congress for nearly 20 years, but that bill has never been passed into law.
He pointed out that the bill witnessed opposition from major commercial groups, fearing the consequences that would strike the American oil and gas industry, and among the most important of these groups are the American Chamber of Commerce, the American Petroleum Institute (API) and the producers of shale oil (shale oil), who achieved (according to the Secretariat’s estimates) revenues that exceeded $1.2 trillion from 2000 to date.
He pointed out that the rise in oil prices in the recent past contributed to encouraging investment in the field of shifting towards alternative sources of energy, but the current perspective confirms beyond any doubt that these alternatives are still far from the possibility of removing fossil energy sources from its throne.
Despite rumors that wind and solar energy are the solution to the crisis that could result from the exit of Russian oil from the market, the reality is that the share of renewable energy sources, after more than 20 years of expansion and research, has only constituted less than 6 percent of the energy mix consumed globally in 2020.
The installed capacity of these energies is also not distributed to ensure that it constitutes an effective contribution to the energy mix in emergency situations, such as extreme weather, or unexpected geopolitical changes.
As in the case of the Russian-Ukrainian crisis, Europe’s consumption of renewable energy in 2020 represented about 28 percent of the world’s total consumption, but more than half of that energy is concentrated in only 5 countries (Germany, Britain, Spain, France, Italy), and it is no secret that the rare metal and metallic elements form the backbone of the renewable energy industry.
Bin Sabt added that, on the same level, no party has hidden that the voices calling for reducing carbon dioxide emissions have become less intense, as priorities have been modified, as securing alternative sources of Russian oil and gas has become more important than the issue of the environment, not only at the present time, but also the long-term, as Europe’s efforts began to build stations to receive liquefied natural gas as a possible alternative to Russian gas, and some stations operating on coal have returned to work after they were stopped for purely environmental reasons.
He stressed that despite the recent discoveries made in some countries of the world, and the recent development of some fields, which always attract attention, mature fields are considered the backbone of meeting energy demand, as they contribute to more than 66 percent of oil production in the world.
The role of mature fields in the Arab region in this field is hidden, which bear the burden of meeting the growing domestic demand in addition to meeting a significant part of the global demand.
He said that since the main objective of exploration operations is to reach the best available resources, it is superfluous to say that the petroleum industry, in order to obtain the highest return on its investments, always depends on modern technologies to overcome the obstacle of the volatile oil price environment, and the obstacle of the length of time required to implement petroleum projects.
He stressed that modern technologies in themselves represent a significant challenge, as technological changes are growing rapidly, linked to a large extent with the incentives that support the development of this technology.
The decline in investments in the field of exploration and production clearly means the possibility of a decline in petroleum supplies, and a decline in production capacities, which will be reflected on prices and the global economy.
He added that the world witnessed a decline in discoveries in 2021, which caused a decline in oil and gas reserves in the world by 1 percent between 2020 and 2021, while estimates had shown that world oil reserves rose by 2.6 percent between 2019 and 2020.
He stressed that the decline in investments also leads to a decline in the development of the reserves of known fields, which means the inability to compensate for what is produced from them, and here the importance of the cost factor must be emphasized, as the total amount of oil in the ground does not matter in itself as much as the quantities that can be produced economically, the arrival of oil prices to an acceptable level for producers and consumers contributes to an increase in investments in exploration, drilling and infrastructure construction, while productionable reserves decrease with lower prices or with an increase in the cost of a barrel, as some of them become outside the margin of economic return.
Despite the rise of many voices in recent years in support of the transition or the energy transition and its subsequent stages, this transformation, if successful, requires a not short period, which means that oil and gas will remain among the most important sources of energy in the world in the long run.
It can even be emphasized that the post-oil era is just a loose expression because the world is heading today to use a mixture of energy sources in which the share of one source may rise at the expense of another, but it will certainly not abandon oil and gas .
Bin Sabt expected that oil prices would remain at reasonable levels acceptable to producers, consumers and investors alike, and that the current conditions the world is going through emphasize the strategic importance of the member states of the Organization of Arab Petroleum Exporting Countries as a safety valve for the energy system in the world, in terms of their position in relation to to global markets on the one hand, and on the other hand, as it owns 54.5 % of the world’s total oil reserves, and produces more than 27.5% of the world’s total production of hydrocarbon liquids, as it owns 26% of the world’s reserves of natural gas, and markets more than 15 percent of the total gas marketed in the world.
Bin Sabt indicated that it has been about a year since the “roadmap to reach zero emissions in 2050”, which was published by the International Energy Agency in May 2021.