Balancing ongoing oil demand with the critical need to slash emissions

The world will continue to call upon a steady flow of oil to fulfil growing energy needs going forward even as societies seek to reduce emissions. And this dependence will require an open mind, strong policy and investment to avoid supply disruptions that can rattle economies.

These were among the messages from a Ministerial session titled “The continued importance of oil security in the energy transition” which saw key energy leaders touch on the strategies and attitudes vital to an affordable energy supply that must cater to rising demand, not least in India.

HE. Hardeep Singh Puri, Minister of Petroleum and Natural Gas, Government of India, told the Collaboration Stage: “I am a great believer that we all have one common vested interest that we want the processes of peace and stability and that energy is a lifeline, not only of our economy.”

The Minister said more “traditional” energy will come into the market, including oil, particularly from the western hemisphere, while India was “being responsible” and producing record amounts of biofuel blending as consumption increases, which he described as “the good part of the Indian rule story”.

He agreed the energy transition was “inevitable…it will take place” but people had to live in the real world. “We are all participants in a process in which there are lots of moving parts,” he said. “I’m not in the prospecting game but we have to, as a government, make sure energy is consistently available to our consumers.”

Dependence on oil is set to be reduced in the long-term, but for now remains crucial in the energy mix, as such that supply disruptions can bring about significant economic issues and price spikes.

H.E. Haitham Al-Ghais, OPEC’s Secretary General, spoke of his organisation’s role at the heart of oil and asked the audience to imagine the markets with without OPEC. “Stability is key for global prospects…without stability you cannot have investment,” he said.

H.E. Al-Ghais spoke of the OPEC+ unity, a mechanism “away from political considerations” and the “value OPEC brings to the global economy”. He added: “Last year, oil was the least volatile commodity…these are our objectives.”

The Russian Federation, meanwhile, provides huge amounts of energy to India, which H.E. Pavel Sorokin, First Deputy Minister of Energy described as one of the “key growth drivers” of the market. “We are pragmatic, we value our relationships and will continue to supply,” he said.

H.E. Sorokin added to H.E. Puri’s sentiments about the ongoing shift in the energy ecosystem suggesting it should be called “an energy revolution…transition sounds too extreme”.

He also described it as a “single market…we live on the same planet.” “Energy is the backbone of every economy… it’s a service that’s expected,” H.E said.

OPEC suggests global oil demand is expected to increase by almost 18 mb/d, rising from 102.2 mb/d in 2023 to 120.1 mb/d in 2050, bolstered by robust growth in petrochemicals, road transport and aviation sectors.

The OPEC Chief’s notion of stability resonated with H.E. Sorokin, who said that oil price now gave a “reasonable” return on investment that enabled investment.

“The premium for investing in energy globally has increased,” he added. “We want a balance between consumers and producers and we will continue working with that logic in mind.”

H.E. Al-Ghais, meanwhile, summed up the relationship between oil and renewables as “all about balance”. “They should not be in competition with each other…oil should not be at odds,” he said. “Oil is paramount for growth. Without oil, the world will stop.”