- Al-Ghais’s statements carried a warning against the consequences of calls to stop investment in the sector, and that they would lead to military consequences. He stated that “investment in the oil and gas sector is important for energy security.”
- The Secretary-General said: “Our spare production capacity is declining sharply. We have said this repeatedly, which requires the combined efforts of all parties concerned to realize the importance of investment in this sector.”
- UAE Energy Minister Suhail Al Mazrouei echoed this call, saying investments by international and national oil companies are necessary. Al Mazrouei added that these investments require the financial community to be determined to finance oil and gas.
An energy crisis is looming
Regarding the crisis of lack of investments in oil and gas and its consequences on global markets and economies, the economic researcher specializing in oil affairs, Amer Al-Shoubaki, says in exclusive statements to the “Eqtisad Sky News Arabia” website, that there is a real energy crisis looming on the horizon due to the lack of investments in sector, and this crisis is brewing now and will appear at any time, in light of the current investment gap with the lack of investments to meet the growth in demand, which leads to constantly decreasing rates of surplus capacity in light of this shortage.
He points to the noticeable decline in the volume of investments in oil and gas, compared to the growth of investments in the renewable energy sector, adding: “We see that investments currently are not what they were in the past… There is a need for investments worth 500 billion dollars annually, and 12.6 trillion dollars by the year 2045.” Concerning oil.
It is noteworthy here that about $2.8 trillion is scheduled to be invested globally in energy in the year 2023, more than $1.7 trillion is expected to go to clean energy – including renewable energy sources, electric vehicles, nuclear energy, and low-emission fuels, And improved efficiency and heat pumps – according to reports by the International Energy Agency. Which showed that about a trillion dollars will go to coal, gas and oil.
In the same context, Al-Shoubaki points out that investments in the oil and gas sector are facing, in another context, an attack from some parties that seek to curb those investments, including the International Energy Organization, which recently stated that demand for fossil fuels is expected to reach its peak before 2030, “and this Perhaps it is more wishful thinking than real expectations, which are completely far from reality,” he said.
In this context, reference is made to Al-Ghais’s statements on Monday, during which he stressed the importance of continuing investment in the oil and gas sector, and explained that he believes that calls to stop investment will be counterproductive.
Al-Ghais said in his aforementioned statements: “We still expect demand for oil to be very strong this year as it was last year,” noting that the organization’s expectations indicate demand growth on an annual basis by more than 2.3 million barrels per day.
Returning to Al-Shoubaki’s speech, he points out the consequences of the state of “uncertainty” that the global economy is witnessing and its effects on investments in the energy sector, pointing to the impact of tight monetary policies and raising interest rates, which are expected to continue for two years, adding more pressure to investments, as the investor is waiting A return that meets economic feasibility.
New investments
In this context, Total Energies CEO, Patrick Pouyanné, had confirmed that “the oil market is feeling the repercussions of the lack of investments.”
He stressed that the demand for oil is strong and the market is feeling the repercussions of the lack of investments. On the sidelines of the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC 2023), Pouyanné said in an exclusive interview with Sky News Arabia that the current oil prices encourage producers to pump new investments into the sector.
In addition, the advisor and economic expert, Dr. Kamal Amin Al-Wasal, said in exclusive statements to the “Eqtisad Sky News Arabia” website that “energy is like any commodity – even if it has its own characteristics – the future supply of it is affected by current investments, and hence the lack of investments or their decline.” In the field of energy, it portends some risks in the market, especially in light of increasing demand, as a result of the growing population.
This matter – in assessing the connection – has a peculiarity; Because the investments required in the field of energy are not only required in the areas of exploration and extraction, but also huge investments are required in the areas of renewable energy. To reduce carbon emissions and increase reliance on clean energy sources such as solar energy, wind energy, and others.
He added: “Therefore, the lack of investments in the field of energy carries a double risk: a risk that may cause bottlenecks in supply, leading to an increase in energy prices, which is an essential component in the production of all goods and services… and another risk represented by a lack of investments in the areas of clean energy that have not been “It becomes a luxury as a result of the known negative effects on emissions resulting from the use of traditional energy such as oil and gas, and their climate impacts, which we are now feeling and being affected by more than ever before.”
The economist stresses that “the demand for energy is determined based on the demand for all goods and services, and therefore the state of “uncertainty” in international markets for investments in general is subsequently transmitted to investments in energy, and the impact of the state of uncertainty on the field of energy increases in light of Current geopolitical tensions and the war in Ukraine (..).”
He concludes his conversation with the “Eqtisad Sky News Arabia” website by saying: There is no doubt that the turmoil and instability in the energy markets may lead to a rise in energy prices and a shortage or instability of supplies, which will clearly affect the global economy.
In his aforementioned statements, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), Haitham Al-Ghais, stressed the necessity of investing in environmentally friendly means that contribute to reducing emissions.
Also, earlier, last month, the Secretary-General of OPEC, Haitham Al-Ghais, confirmed that abandoning fossil fuels “will lead to energy chaos on an unprecedented scale, and will have dire consequences for economies and billions of people around the world.”
It is noteworthy that the Organization of Petroleum Exporting Countries (OPEC) has kept its expectations for the growth of global oil demand unchanged during the current year.
Economic conditions
In addition, the economic expert, Dr. Ali Al-Idrissi, said in exclusive statements to the “Eqtisad Sky News Arabia” website that the decline in the volume of investments in the oil and gas sector as mentioned is due to a number of economic factors related to the developments taking place in the world, including the impact of banks’ resort to… Grand Central has raised interest rates since last year, with the aim of curbing inflation, which in turn affects investments in general, including investments in the energy sector.
Among the factors that Al-Idrissi refers to, which in one way or another affected the decline in investments in the sector, is related to governments providing greater incentives towards clean energy at the expense of traditional energy. It also adds another reason related to the high cost of investment compared to previous years, which created the current gap between current investments and previous investments.
He adds: “The state of uncertainty that the markets are suffering from leads to a gradual decline in the volume of investments (..) and leading to a decline in the supply of oil (..) which in turn is reflected in the disturbances in oil prices, affecting all industries, given that energy A major element in the production of any good or the provision of any service (..).”
interest rates
In addition, financial markets expert, Dr. Hossam Al-Ghayesh, in exclusive statements to the “Eqtisad Sky News Arabia” website, points out that high inflation rates constitute a major crisis in the world, which represents a major obstacle to investments, especially in the energy sector, because the energy sector Finance-intensive sectors.
The financial markets expert noted that in light of the current global scene, there will be a broader decline in many investments, and this will negatively affect energy prices around the world and lead to their significant rise, especially in the winter (..) because energy prices are expected to rise. During the next few months as a result of the lack of investments and the high demand for energy and its derivatives during the quarter.”
The financial markets expert continues: There may be some kind of improvement in the energy crisis with the beginning of reducing the crisis of lack of investment in the sector, or a decline in inflation rates and thus a decline in interest rates in central banks, leading to a state of boom in huge investments accordingly, and this improvement may occur. Over the course of at least a year or two when interest rates around the world improve.
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