The global oil industry will require $14 trillion in investments or about $610 billion annually, until 2045 to meet rising energy demand, Opec secretary-general Haitham Al Ghais said.
The Opec chief, who spoke at India Energy Week in Goa on Tuesday, said global oil demand “will continue to rise and there is a need to ensure that supply is maintained”. He estimated that demand would rise between now and 2045 by 23 per cent.
Global oil demand growth is forecast to far outpace the expected rise in non-Opec supply over the next two years. The producer group has started charting its course to manage the market ahead. In its closely watched monthly oil market report, Opec estimated the world’s thirst for oil to increase 2.25 million barrels per day in 2024 and another 1.8 million b/d in 2025.
In June 2023, the International Energy Agency said it expected global oil demand growth to slow significantly by 2028 as high prices and supply concerns hastened the shift to cleaner energy. Based on current policies and market trends, crude demand will rise by 6.0 per cent between 2022 and 2028 to reach 105.7 million bpd, supported by strong demand from the petrochemical and aviation sectors, the Paris-based agency said in its medium-term oil market report.
Ghais said the twin focus of the Indian government to pursue both fossil fuel growth as well as renewables is the right path to adopt. “The Indian government has said consistently that the future will require all forms of energy, which is a message that Opec fully supports,” Ghais said.
Given India’s future energy needs for its expanding and aspirational population and the fact that Opec member countries provide approximately 60 per cent of India’s total crude oil imports, this strategic relationship would continue to be vital in the years and decades ahead, Ghais said.
“India will play a vital role in the future of the industry. According to our forecasts, oil demand in India is set to rise from 5.1 million b/d in 2022 to 11.7 million b/d by 2045. It will be the country with the largest oil demand growth over this period,” he added.
Commenting on the evolving global energy industry, he said it has never been more important to work together and adopt a holistic, practical and inclusionary approach as the world concentrates on the task of providing energy security for all while reducing emissions.
“We continue to be aligned by the need for every nation and people to have their energy transition pathways. It is not a uniform energy transition for all. There are multiple pathways to take. There is no one-size-fits-all solution to a sustainable energy future,” Ghais said. “No single source of energy will be able to fuel the global energy demand,” he added.
India’s oil demand is expected to double by 2045 to 38 million bpd from its current 19 million bpd, India’s Prime Minister Narendra Modi said early at the event. “India’s oil demand is expected to increase to 38 million barrels per day by 2045 from the current 19 million barrels. India is consistently growing its energy capacity. We aim to increase the share of natural gas to 15.0 per cent of primary energy from 6.0 per cent now. By 2030, the refining capacity will be at 450 mtpa in India,” Modi said.
The Opec chief was also vocal about oil’s place among the energy sources even as far out as 2045, saying that even as many nations around the world look to triple their renewable energy capacity, no single renewable source will be able to carry the weight of the global energy demand growth.
“We need to invest (in oil) to be able to ensure the security and reliability of the supply is maintained,” Ghais said. Energy ministers from oil-booming Guyana and natural gas-abundant Qatar have said that while there is a need to bring renewable energies into the oil and gas sector, phasing out conventional energy sources such as fossil fuels is still a long way away.
According to a report by the International Energy Forum (IEF) and S&P Global Commodity Insights, a cumulative $4.9 trillion of investments in global upstream oil and gas are needed by 2030 to meet market needs and prevent a supply shortfall, even if demand growth slows toward a plateau.