The Organization of the Petroleum Exporting Countries (OPEC) said its repeated calls for greater investment in the oil sector have been vindicated, responding to a new report by the International Energy Agency (IEA).
The IEA released a study on Tuesday, titled “Implications of Declining Production Rates in Oil and Gas Fields”, that warned that in order to maintain current output levels, the world will need more than 45 million barrels of oil per day and around 2 trillion cubic meters of natural gas from new conventional fields by 2050.
In its statement, OPEC noted that the report highlighted the factors that have shaped investment trends in the oil sector. The group said market developments clearly impact oil and gas activity, pointing to the US shale boom.
According to OPEC, sharp drops in crude prices in 2014, 2015, and 2020, along with long-term uncertainty about demand, discouraged spending on large, long-term conventional hydrocarbon projects.
OPEC stressed that the IEA report did not acknowledge the agency’s own role in discouraging investments. It pointed in particular to the IEA’s earlier promotion of a net zero emissions scenario and its forecasts of peak oil demand, which OPEC argued amplified uncertainty about the sector’s future.
Back in May 2021, IEA Executive Director Fatih Birol told The Guardian that governments serious about tackling climate change should halt all new investments in oil, gas, and coal.
At the launch of the agency’s latest report, Birol struck a different tone, warning that a lack of investment could remove from the global market an amount of oil equivalent to the combined output of Brazil and Norway every year. He added that the industry will need to run much faster just to stand still.
OPEC contrasted this shift in stance with its own position, stressing that it has consistently called for timely investment in oil to offset natural decline rates and meet future demand.
The group urged stakeholders to take a consistent approach to this reality and avoid returning to rhetoric that discourages new oil projects.
