Top producers warn against divestment from oil and gas

oil and gas

DOHA/DUBAI: Qatar’s energy minister warned on Tuesday the “worst is yet to come” for Europe’s oil and gas shortages, saying a warm winter had prevented greater difficulties in recent months. Saad Al-Kaabi and his Saudi counterpart Prince Abdulaziz bin Salman said a lack of investment in oil and gas, as the world tries to transition to cleaner fuels to prevent global warming, risked causing an energy crunch.

“The only thing that saved humanity and Europe this year was a warm winter, and the slowdown in the economy,” Qatari Energy Minister Saad Al-Kaabi told the Qatar Economic Forum. “If the economy starts churning back up in (2024) and you have just a regular winter, I think the worst is yet to come.” After Russia’s invasion of Ukraine sparked an energy supply crisis, Europe dodged serious problems this past winter largely because of milder-than-expected temperatures.

But Kaabi and Prince Abdulaziz of Saudi Arabia, the world’s biggest oil exporter, both told the conference further problems were looming. “If (European leaders have) a proper plan and sit down with producers, and oil and gas companies are not demonized, reality will kick in and we’ll have a sensible solution,” Kaabi said.

Qatar has announced a series of major gas supply deals and is engaged in developing North Field, which contains the world’s biggest natural gas deposits, raising its production to 126 million tons per year by 2027. Demand is so great that all the expanded production for the North Field East and North Field South could be tied up in long-term deals by the end of the year, Kaabi said. “There is a potential that we will run out of all the gas from the NFE and NFS by the end of the year, as far as long-term contracts,” he said. “That’s obviously a very big demand.”

Prince Abdulaziz also said Europe was “rescued by a gift of God” last winter, and said global energy security was at risk from “kicking the can policies”. “Energy security is being shackled. We’re running out of capacity, because countries are not investing both in oil and gas,” he said, mocking the push for cleaner fuels including green hydrogen, which is produced using renewable energy.

“People go around talking about blue, green, purple, pink hydrogen, but in the final analysis, who is going to be the offtaker?” he said, referring to the proposed buyer. “What would be the price of hydrogen? We’re not talking oil, we’re not talking gas. We’re talking about the so-called cleanest, greenest fuel of the future. And yet, you don’t have the offtakers.”

Qatar Airways’ chief executive also doused hopes that the aviation industry can become carbon neutral by 2050, saying he was “very skeptical” about the target. Not enough sustainable aviation fuel is being produced, and technological hurdles remain to using hydrogen as a replacement, Akbar Al-Baker told the Qatar Economic Forum.

In 2021, the International Air Transport Association’s member airlines committed to achieving net zero carbon emissions in their operations by 2050. But Baker said: “I don’t think that we will be able to achieve net zero emissions by 2050. Everybody’s talking about it but let us be realistic.” Baker’s comments come just a few weeks after Emirates airline’s president Tim Clark also cast doubt on global aviation’s ability to quickly move away from traditional jet fuel. Baker said: “There is not enough production of sustainable aviation fuel. The hydrogen project is in its infancy. The hydrogen technology will mature in the second half of the century, which means after 2050, which means we will not achieve what everybody’s been promised will happen. I’m very skeptical about this (goal).”

However, Boeing CEO Dave Calhoun said sustainable aviation fuel remained the best hope for achieving net zero by 2050. “Really the only significant contributor by the way of changing technology is sustainable aviation fuel. That’s the only thing that moves the needle between now and then,” he told the forum in Doha. “Every new airplane that we or our competitors sell today, if it displaces an older aeroplane in their fleet, is usually 20 to 30 percent better on emissions… but the only thing that achieves net zero is sustainable aviation fuel,” Calhoun added. The aviation industry produced more than two percent of global carbon dioxide emissions in 2021, according to the International Energy Agency.

Meanwhile, OPEC Secretary General Haitham Al-Ghais emphasized that “despite the urgent need for investment, we have heard disheartening calls from some quarters to divest from hydrocarbons”. He added OPEC has been clear in highlighting the very real and dangerous consequences of divestment or underinvestment in the oil industry. “The reality is that oil and gas will continue to be an integral part of the energy mix for the foreseeable future,” he pointed out.

Ghais also said technological innovation would play a critical role in reducing greenhouse gas emissions in a speech he delivered during the 30th Annual Middle East Petroleum and Gas conference (MPGC) held in Dubai. “This is why our member countries invest heavily in hydrogen projects, carbon capture utilization and storage facilities, and the circular carbon economy,” he said.

Ghais also said on Monday that energy transition must be fair and inclusive, where no one would be left behind. The secretary general made these remarks in his address to OPEC’s 23rd Coordination Meeting on Climate Change held via videoconference in preparation for the upcoming COP28 meeting.

Ghais stressed, in a pre-recorded video message, that “we are particularly proud to have an OPEC member country at the helm of the highly important COP meeting. Just recently, COP28 President-Designate Dr Sultan Al-Jaber, UAE’s Minister of Industry and Advanced Technology and Special Envoy for Climate Change, presented his larger ambitions for the COP.”  Ghais noted the importance of the meeting, adding climate change is a great global challenge that affects all countries and peoples. —Agencies


ENB Top News
Energy Dashboard
ENB Podcast
ENB Substack