Petroleum Exporting Countries, Abdalla El-Badri, on Wednesday urged oil producers to look for alternative sources of income and develop other sources of energy aside from crude.
Crude oil accounts for over 90 per cent of Nigeria’s exports and remains the key source of foreign earnings, but the country has seen a significant drop in oil revenue in recent months following the fall in crude prices in the international market.
The cartel, according to El-Badri in his presentation at the 6th OPEC International Seminar, sees global oil demand growing to 111 million barrels per day by 2040, an increase of around 18 million bpd.
He, however, said the expansion would require huge investments.
“It means we need to have clarity in terms of demand and, in turn, supply. This requires an understanding of the impact of the energy and environmental policies that are already in place and those that are proposed,” the OPEC chief noted.
He added that producers and investors would obviously want to see some signs of certainty.
El-Badri said, “No one wants to waste huge amounts of capital on unused plants and equipment. But if these signs are not forthcoming, we could find that there is not enough new capacity and infrastructure in place to meet rising demand levels.
“For oil producers, it is important to recognise that they cannot stand still and they need to think about an affordable, balanced and sustainable future.
“Yes, oil is part of this future, but diversity is essential. They (oil producers) need to look for alternative sources of income and they need to develop other sources of energy, particularly when many have distinct advantages in terms of solar and wind.”
He noted that there were also a number of other uncertainties and challenges facing the industry.
“We are all obviously aware of the current market situation. It is essential that stability returns to the market to allow for the necessary investments to be made to meet future energy demand. This is something OPEC always strives for and it is in the interests of all parties,” El-Badri added.
Other factors to consider, according to the OPEC chief, are the uncertain prospects for the global economy; ongoing concerns about excessive speculation and the role of financial markets; the impact of geopolitics; potential manpower shortages in the years ahead; and advances in technology and their impacts on exploration and production.
El-Badri added, “As an industry, there are many challenges and uncertainties we can face together. We appreciate the continued dialogue we see between producers and consumers. It is essential to have a producer-consumer environment that is conducive to reaching constructive end results.
Meanwhile, OPEC has warned that hard times are not over for its members countries as more industry challenges await them in the future.
The alternate President of OPEC and Qatar’s Minister of Energy and Industry, Dr. Mohammed Bin Saleh Al-Sada, said in Vienna, Austria on Wednesday that member countries were not out of the woods yet.
Al-Sada said, “Of course, we are not out of the woods yet and we are still faced with a lot of uncertainty. That is why we must remain vigilant and keep our attention firmly fixed on the future. We know full well that the oil industry will continue to face new challenges and these will require new solutions.
Source: Business News