Official warns of more energy shortages, volatility without new fossil-fuel investment
VIENNA—OPEC’s secretarygeneral said consumers should brace
for more energy shortages unless the world boosts investment in new oil-and-gas
development, the cartel’s first, fullthroated response to increasing calls to
limit such spending. In May, the International Energy Agency, an energy BY
BENOIT FAUCON AND SUMMER SAID watchdog for richer countries, said investment in
new fossilfuel supply projects must immediately cease if the world is going to
slash net carbon emissions to zero by 2050. Meanwhile, big oil companies have
made moves to curb emissions and pivot toward renewable energy sources, spurred
by pressure from investors, customers and in some cases governments and courts.
If that all results in lower investment in finding and pumping new deposits of
crude and natural gas, the world risks more of the sort of energy-price
volatility it is seeing now, said Mohammed Barkindo, the head of the
Organization of the Petroleum Exporting Countries, in an interview. “The energy
crisis in Europe and many parts of the world is a wake-up call,” he said,
adding, “It all comes back to the issue of investment across the oil-and-gas
industry.” Natural-gas prices have soared amid low inventories in the U.S. and
Europe, while high coal and gas prices and government efforts to cut
electricity use have led to power cuts in China. Global oil prices, meanwhile,
have soared this year, and are near their highest levels in three years. The
global energy crunch comes at a time of extraordinary demand, as economies
bounce back after near hibernation amid the worst months of the pandemic. Mr.
Barkindo said, however, that past bouts of underinvestment in new fossil fuels,
and today’s pressure to curb new investment even more, have exacerbated the
volatility by sapping supplies. OPEC, a group of some of the world’s largest
producers, said earlier this past week that the world is projected to require
$11.8 trillion in oil-andgas investment through 2045 to meet growing demand. In
2020, Mr. Barkindo said oil-and-gas investment fell 20%. That came despite the
industry not fully making up for a previous period of underinvestment amid low
prices between 2015 and 2016. “We need to buckle up more investment in capital
to revive the production cycle,” he said. “On top of that contraction, you have
the energy transition,” he said, which has added more pressure on governments
and oil companies to divert money from oil-and-gas development to renewables.
Mr. Barkindo said there has been “a global campaign [against] the oil industry
to crowd out investors out of oil and gas.” OPEC is set to meet Monday to
decide whether to pump more crude. At the start of the pandemic, the cartel and
a group of allied producers led by Russia sharply reduced output to stabilize
falling prices. In recent months, the two groups have been working together to
slowly restore that output. Mr. Barkindo’s call for more oil-and-gas investment
comes ahead of the United Nations’ first major summit on climate since the
Paris agreement in 2015. Governments will meet in November in Glasgow,
Scotland, to discuss ways to lower greenhouse-gas emissions.