Continued Investments In Oil & Gas Important To Support Global Economy: IEF General Secretary
International Energy Forum (IEF) Secretary General Joseph McMonigle on Tuesday said investments into Oil and Gas needs to persist even as industry presses ahead with clean energy revolution. He said that the investments into oil and gas would be crucial for supporting the global economy and protecting quality of life for many people.
Speaking at the India Energy Week (IEW) 2023, McMonigle said that the world will still rely on oil and gas for about half of all energy needs even as investments into renewables ramp up.
“When markets are tight, the markets send us signals in the form of high prices, signaling the need for investment,” he said, emphasising that oil and gas investments can help mitigate pricing crisis in the energy sector.
Citing IEF’s latest findings on upstream oil and gas investment outlook, the IEF Secretary General reported a large increase in investment last year in 2022, where capital expenditure jumped by 39 per cent to USD 499 billion. “This is the highest level since 2014 and the largest annual gain in history. But this increase did not mean the corresponding growth in drilling because costs and inflation also rose steeply,” he said.
The IEF report estimates that an annual upstream in oil and gas investment will need to hit USD 640 billion in 2030 to ensure adequate global supplies. In total, USD 4.9 trillion will be needed until 2030 to meet market needs, even if the growth in oil and gas demand slows down.
“As we saw last year, our high prices and volatility had disastrous effects on households all over the world hitting the poorest people the hardest.”
He said that under-investment in oil and gas threatens energy security and stalls progress on climate goals by increasing reliance on more carbon intensive options.
“High prices and volatility caused by this under-investment puts at risk public support for climate goals. So, we need to manage the transition,” IEF Secretary General Joseph McMonigle said.
Earlier at the IEW 2023, OPEC Secretary General Haitham Al Ghais had said that oil needs more investment even as the energy narrative shifts towards cleaner fuels. He said that the oil sector will need USD 12.1 trillion in investments until 2045.
Weighing in on the topic of practical energy transition, Minister of Petroleum and Gas Hardeep Singh Puri said the process must be undertaken in a manner that would provide a cushion to the most affected and vulnerable people, who get impacted by the "volatility and turbulence" in the energy space.
During his address at IEW 2023, the IEF Secretary General McMonigle also said that future of energy will be determined in India due to the rising demand within the country and promise of its stupendous GDP growth rate and innovations.
