SPECIAL REPORT; Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference

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Mohammad Sanusi Barkindo

 

Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021 © 2021 Organization of the Petroleum Exporting Countries
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HE Mohammad Sanusi Barkindo, OPEC Secretary General
Special Address (30 minute session)
S&P Global Platts Americas Petroleum and Energy Conference
‘The pursuit of global multilateralism to help drive the global
energy transition’
27 January 2021
Ladies and gentlemen,
Good morning to our friends on the other side of the Atlantic,
and good afternoon to everyone here in Europe.
It is a great pleasure to deliver this ‘Special Address’ at the
S&P Global Platts Americas Petroleum and Energy Conference. I
would like to thank the organizers for the invitation, and to all those
who have taken time out from their busy schedules to listen in
today.
I have been asked to speak about ‘the pursuit of global
multilateralism to help drive the global energy transition’. It is a
topic very close to my heart, and central to the Organization that I
humbly lead as Secretary General.
Multilateralism has a long history, but it has perhaps never
been more important to the world as we look build and shape
today’s architectures for tomorrow. It will be vital for the energy
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
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transition, which is both a massive challenge and an enormous
opportunity in the decades ahead.
To put it simply: we need to mould multilateralism and the
energy transition into a form that delivers for each and every
person on this planet.
For OPEC, what has been clear since it was founded back in
Baghdad in September 1960 is the value placed on ever broadening
dialogue and cooperation.
As an intergovernmental organization we have always been a
proud member of the multilateral system. It is integral to our
existence and central to our raison d’être.
The Founder Members acted in strict accordance with UN
Principles and purposes in establishing OPEC and the very first
resolution of the fledging Organization put dialogue front-andcentre.
Over the decades, this has expanded far and wide. Today, we
have established productive dialogues with other international
organizations such as the International Energy Agency, the
International Energy Forum, the Gas Exporting Countries Forum,
and cooperate and hold talks with the G20, the International
Monetary Fund, the World Bank and various UN entities.
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
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There are also a variety of constructive dialogues with major
oil consumers and producers, such as the EU, India, China, the
Russian Federation, as well as with a number of US energy industry
stakeholders.
These relationships were particularly vital in 2020, in the face
of the colossal impacts of the COVID-19 pandemic, something I will
return to later.
It all underscores how OPEC is now an established part of the
international energy community and the multilateral system.
In this regard, an outstanding example of the multilateral
approach can be viewed through the prism of the Declaration of
Cooperation (DoC), now in its fifth year, which has brought together
23 oil producing nations to help return balance to the market, and
achieve a sustainable stability, in the interests of both producers
and consumers.
It has helped the industry traverse two historic downturns. It
has ushered in a new era in global energy cooperation.
Back at the start of 2017, the focus of the DoC was on
returning balance and stability to the oil market in the aftermath of
the devastating 2014-16 oil industry downturn.
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
4
The downturn had brought the industry to its knees. Nearly
half a million people lost their jobs; an estimated one trillion
dollars in investments were either frozen or deferred; a record
number of companies filed for bankruptcy; and by July 2016
the OECD commercial stock overhang had soared to a record high of
about 403 million barrels (mb) over the five-year industry average.
Over the subsequent three years, from 2017-2019, the diligent
and coordinated response through voluntary production
adjustment decisions taken by the DoC helped rebalance the
market, restore stability and revive the industry.
When the year turned from 2019 to 2020, there was a great
deal of optimism for the oil market in the coming 12 months. Not
only for the oil market; the global economy too.
By March, however, the COVID-19 pandemic had pervaded
almost every aspect of our daily lives, with widespread lockdowns,
economies in major distress and many businesses shuttered in.
In terms of the oil and gas industry, every producer was
impacted. No-one was immune.
The DoC had to again stand up and be counted. Action was
needed, and act we did with the largest and longest production
adjustments in the history of the OPEC, the DoC and the oil industry
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
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agreed on 12 April 2020 to help counter the massive oil demand
decline that at times was above 20 mb/d in April.
The phased reductions in the adjustment levels over a twoyear period demonstrated the full commitment of all participants a
common goal.
I am sure each and every one of us can recall the dire situation
the industry was in, which was most dramatically illustrated on 20
April 2020 when the price of WTI went negative. It was a visceral
day, and one often described as ‘Black Monday’.
It was a time when the industry faced a potential crude
oversupply of nearly 1.3 billion barrels. There were even deep
concerns that some storage hubs could actually reach tank tops.
Thankfully, this never came to pass, in part due to the decisive
actions of the DoC. Since then the DoC has shown great courage
and flexibility and has adapted as and when necessary to changing
market dynamics, particularly with the post-summer advent of
second and third waves of COVID-19.
We have never been complacent. It has been one step-at-atime, guided by the data and analysis and robustly supported by the
strong multilateral process we have in place.
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
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Another pivotal outcome of the April 2020 meetings has been
the broader encouragement and support that DoC participants have
received. This came from the very highest levels of government,
from the G20 and from the very largest global oil producers,
including Norway, US and Canada, as well as consumers.
This was further built on with OPEC comparing notes with US
independents, a relationship that has blossomed since we first met
in Houston in 2017; other producing nations, such as Norway,
Colombia and Brazil; major consumers, such as China, India and the
EU; and select energy policymakers and experts from international
institutions, consulting firms, the oil industry, the financial
community and think tanks from around the world.
There was an acknowledgement of our mutual
interdependence, and the benefits of working together to return
confidence and stability to the global oil market.
The DoC was at times a polestar for the oil market during
some of the dark days of 2020; a multilateral approach helping
guide the industry through stormy waters.
We also realize our work is not done. We have our eyes firmly
fixed on 2021. It is clear the recovery has been fragile and
uncertainties remain, particularly in terms of the pandemic.
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
7
Vaccines offer some much needed light at the end of the tunnel, but
the ever increasing number of COVID-19 cases, and sadly human
loss, as well as renewed lockdowns, are a harsh reminder of how
delicate the situation remains.
Nonetheless, we are cautiously optimistic for the global
economic rebound in 2021, and for significant oil demand growth.
But we will continue to take a month-by-month approach to
assessing market conditions, and stand ready to take any necessary
actions through the DoC.
In looking further ahead, oil market stability, and more
broadly, energy market stability, will be vital to the energy
transition.
Stability begets stability, and this will be essential to helping
bring on board the huge investments required in the years ahead.
Our World Oil Outlook (WOO) 2020 shows that $12.6 trillion will be
required between now and 2045 in the upstream, midstream and
downstream oil sectors.
To place this in some further context, our current assessments
show that upstream capital expenditure could have fallen by more
than 30% in 2020, beyond the 23% losses experienced in both
2015 and 2016.
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
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If this is not rectified it could leave long-term scars, not only
for producers, but consumers too.
The return of investments is a core objective of the DoC. And,
of course, huge investments will be required across all energies.
The multilateral approach of the DoC has shown just what can
be achieved by working together, but as I think we can all
appreciate, the future will need the coalescing of a broader coalition
to tackle the energy challenges in the years ahead.
What is clear to all of us is that the world will continue to need
more energy in the decades ahead.
In the near-term, as we recover from the COVID-19 pandemic,
and looking longer term to 2045, as the global economy is expected
to more than double in size, world population is projected to grow
by over 1.7 billion people and given that we need to rid the world of
the scourge of energy poverty, bringing light, heat, power, and lowemission fuels for cooking to billions that still go without.
There are obviously many facets to the future energy
transition, but the basic challenge is simple: how can we ensure that
there is enough energy supply to meet expected future demand
growth, and how can this growth be achieved in a sustainable way,
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
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balancing the needs of people in relation to their social welfare, the
economy, and the environment?
There are some who believe the oil and gas industries should
not be part of the energy future, that they should be consigned to
the past, and that the future is one that can be dominated by
renewables and electric vehicles.
It is important to state clearly that the science does not tell us
this, and the statistics related to the blight of energy poverty do not
tell us this either.
We fully support the science. This is a given. We do not deny
the existence of climate change. What the science and statistics tell
us that we need to reduce emissions and use energy more
efficiently.
Renewables are coming of age, with wind and solar expanding
quickly, but – even by 2045 – in our WOO they are only estimated to
make up just over 20% of the global energy mix. Oil and gas
combined are forecast to still supply over 50% of the world’s
energy needs by 2045, with oil at around 27% and gas at 25%.
We appreciate that some will view this as an OPEC forecast,
dispute the numbers, and state that the Organization is against
renewables.
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
10
In response, it is clear that many OPEC Member Countries
have great solar and wind resources, and huge investments are
being made in this field. OPEC welcomes the development of
renewables. However, we do not see any reputable outlook
projecting in their base cases that renewables will come anywhere
close to overtaking oil and gas in the decades ahead.
In terms of electric vehicles, there is no doubt that they will
continue to see expansion in the transportation sector. In our WOO,
the share of electric vehicles in the total road transportation fleet is
projected to expand to around 16% in 2045. We support their
development in a sustainable manner.
However, for many of the world’s population, electric vehicles
do not offer a viable alternative to the internal combustion engine,
primarily due to cost. There is also debate about how
environmentally friendly they are considering their build process,
especially the required batteries, and the sourcing of the vehicles’
electricity.
Here, I think it is also relevant to highlight one key detail from
our WOO. In the period to 2045, fuel efficiency improvements are
expected to result in a far greater reduction in oil demand, than the
increasing penetration of alternative fuel vehicles.
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
11
Looking at the scale of the challenge of the energy transition,
we need to utilize all available energies, and it is crucial that we
appreciate just what each energy source can provide in the decades
ahead.
The challenge of tackling emissions has many paths and we
need to explore them all. Complex problems require
comprehensive solutions. The oil and gas industries are part of the
solution; they possess critical resources and expertise that can help
unlock our carbon-free future.
We need to look for cleaner and more efficient technological
solutions everywhere, across all available energies. We will need a
very broad portfolio of emission removal technologies to tackle
climate change. We are believers that solutions can be found in
technologies, such as carbon capture utilization and storage (CCUS)
and others, as well in the promotion of the Circular Carbon
Economy to improve overall environmental performance
It is vital that the required investments are made, in all
energies, to ensure stable and continuous supplies, and to help
reduce and, ultimately, eliminate emissions.
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
12
Without the necessary investments, there is the potential for
further volatility and a future energy shortfall, which is not in the
interests of either producers or consumers.
Moreover, if billions of people in the developing world
suffering from a lack of energy access feel they are excluded from
access to energies that have helped fuel the developed world, then
this could sow further divisions and expand the divide between the
haves and have nots, the global North and the South.
Let me be clear: nobody should be left behind in the energy
transition. Sustainable Development Goal number seven of the UN
ensures access to affordable, reliable, sustainable and modern
energy for all people – not just for a select group.
OPEC and its Member Countries have been directly involved in
the evolution of the UNFCCC, the Kyoto Protocol and the Paris
Agreement and fully support the multilateral approach to
addressing climate change and the energy transition. The core
elements of the UNFCCC, particularly equity, historical
responsibility and national circumstances must be considered at all
junctures moving forward.
At OPEC, we welcome coordinated action and engagement
with all stakeholders in the energy community. We also believe we
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
13
have a perfect vehicle – the Charter of Cooperation (CoC). The CoC
is open to all producers and offers a platform to address issues such
as climate change, the energy transition and energy access in a
coherent and inclusive way.
OPEC reaffirms its faith – time and time again – of the need for
dialogue, cooperation, and respect.
We need to talk to each other and not at each other. We need
to work with each other and not against each other.
This was perfectly illustrated by UN Secretary General,
António Guterres, the world’s leading advocate for multilateral
engagement. He said:
“I’m not a multilateralist against anybody. I’m a multilateralist
because I believe in a multilateral order.”
Multilateralism is a means to discuss, reason and lay a path
forward for us all. The challenges our planet faces require solutions
from every corner of society – developed and developing nations.
No-one can act alone.
That is not to say that multilateralism is easy. It is not. It is
often complicated, but it is the only possible response. We need to
keep on communicating and keep on partnering.
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
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Looking across the Atlantic, we believe that we have
established mutually beneficial and productive relationships with
the oil industry in the US, as well as in Canada. We have much in
common and we hope to further deepen these bonds in the years
ahead.
The US is a vital cog in the global oil market, as both a major
producer and consumer.
We also welcome the swift decision of the Biden
administration to return to the Paris Agreement. The energy
transition and the global conversation around it would be
incomplete without the US at the head of the multilateral table.
Ladies and gentlemen,
We are all dedicated and passionate about evolving a
sustainable energy future for all, and in this we need to leverage all
available resources.
It is our deeply held conviction that dialogue and action on
this matter should be inclusive and broad to try and evolve this
energy transition in the least disruptive manner.
We need to think carefully about what an energy transition
actually means; and we all need to follow the right paths.
Special Address of HE Mohammad Sanusi Barkindo, OPEC Secretary General, S&P Platts Amercias Petrolum Energy Conference,
27 January 2021
© 2021 Organization of the Petroleum Exporting Countries
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Working together, through a multilateral approach, we can
build a future worthy of future generations and one where no one is
left behind.
Thank you.

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