BAKU, Azerbaijan, July 15. The credibility and
the trustworthiness of OPEC producers, especially in the Gulf,
should not be questioned by anybody, Secretary General of the
Organization of the Petroleum Exporting Countries (OPEC) Haitham Al
Ghais said in an exclusive interview with Trend.
He made the remarks on the sidelines of the inaugural Technical
Committee Meeting of the OPEC+ Charter of Cooperation in Baku.
"In December 2026, OPEC+ will become 10 years old. I believe
it's a very big milestone for us as a group of producers. The
Declaration of Cooperation was created in 2016, and Azerbaijan is a
valuable player in this alliance. Building on the success of 10
years, it's important for us to be able to show that this group is,
first of all, united. We have been together through many
challenges. In 2016, we had the big downturn in the oil industry,
then COVID-19 in 2020 what ensued after that in the market. So, we
have been tested and proven as a solid group, a unified group that
is capable of meeting all these significant market challenges. We
feel that there is also a broader scope for widening this
cooperation between this group of countries and producers into
areas that are beyond just market stability”, he said.
Haitham Al Ghais believes that there are many different
strengths and capabilities within each individual country that is
in the OPEC+ alliance that allows to build on areas of cooperation
that were not foreseen in the beginning, for example, coordination
of positions for various different international fora such as
climate change, technology transfer, knowledge sharing, training,
doing joint studies, joint ventures between countries.
"All of these areas have been untapped with 22 different
countries in this alliance. There is much bigger scope for
furthering and broadening this cooperation. That's why I think it's
important to say why we are in Baku. Baku has been the first place
for so many different things related to the oil industry. Whether
it's the first oil well in Bibi-Heybat, which is still producing,
or the first industrial modern oil ship. This is why we decided to
have the first technical level meeting here in Baku, building on
the good spirit of having many firsts here that have been tested to
last for hundreds of years. He also praised the kind invitation by
the government of Azerbaijan to host this meeting in Baku," said
OPEC's secretary general.
He praised Azerbaijan's role in strengthening the cooperation
among OPEC+ members.
"I have been coming here every year. Part of the reason why I
come here is to express OPEC's appreciation and gratitude to the
leadership and government”. Of course, under the wise and able
leadership of the President Ilham Aliyev, Azerbaijan has been
instrumental in promoting and supporting the cooperation between
OPEC+ producers for ten years now. Of course, with his able
lieutenant, if I may use that term, the Minister of Energy, my
brother Parviz Shahbazov, and his team have also been instrumental
and highly valuable in this process. They have played a key role in
energy diplomacy and consensus-building, which is absolutely
critical given the diversity of our alliance, bringing together
nearly 22 countries. So, Azerbaijan's role has been absolutely
critical, and we truly appreciate that. That's why I come here year
after year and express gratitude to this country," noted Haitham Al
Ghais.
Balance between market stability and demand
uncertainty
He pointed out that balance between market stability and demand
uncertainty is one of the things where OPEC always takes a very
cautionary approach.
"We have always been able to navigate these difficult times of
uncertainty, because we don't react to headline news. We are very
cautious in our approach, in our analysis, and the detailed level
of analysis that my colleagues undertake at the Secretariat in
OPEC. That's why we do not add to the volatility that is in the
market because of so many different diverging views on demand.
Unfortunately, there are many analysts out there who just react to
a headline about a certain event, be it geopolitical, or
economical. That's not the way that proper analysis should be done.
At OPEC, our research team is focused on the solid data on the
ground. We take a cautious approach, ensuring that we do not
overreact or take unnecessary measures that may later require
adjustments, as has happened with others. This makes us unique in
our approach because our objective is to reduce the volatility in
the market and not add to that volatility by overreacting or
reacting in an unnecessary way when there is no need to," added
OPEC's secretary general.
OPEC+ response mechanisms in times of supply
disruptions
As for the instruments to respond quickly to major supply
disruptions, Haitham Al Ghais highlighted two main factors.
"Firstly, whether it's the current circumstances or any other
circumstances, we have several major OPEC producers that have
invested over many years to be able to be in a position where they
can react for any sudden market situation like we have seen. For
example, our biggest producer, the Kingdom of Saudi Arabia, has the
East-West pipeline, which has come in very useful at these current
times where significant volumes of crude oil have been moved from
the eastern route to the western, to the Red Sea. Other countries
also have other pipeline capabilities. Countries have overseas
storage. There are many other potential routes for ensuring the
stability of supplies and the continuous flow of supplies during
such times. That's the first thing I would say. Those measures have
been tested, they have been very effective in reducing the
shortages of supplies that the market has been witnessing," he
said.
OPEC's secretary general also pointed out that the credibility
and the trustworthiness of OPEC producers, especially in the Gulf,
should not be questioned by anybody.
"We have recently seen, unfortunately, the executive director of
the International Energy Agency recently coming out and using terms
about the lack of trustworthiness of the straits, or that some of
the producers have to rebuild trust. I think that is both unfair,
wrong, and not helpful. We have done everything we can to make sure
that the world has sufficient and adequate supplies. The market has
adjusted in many different ways. But questioning the reliability
and trustworthiness of producers in the Gulf — where we have been
among the most reliable producers for decades — is, in my view, not
helpful. Incidents happen, wars happen, things that are beyond our
control happen. By the same token, if I want to argue, we had World
War II in Europe from 1939 to 1945. Nobody came and said we should
not have trust in the European manufacturing or the European
industries, for example. I think the worst thing that could happen
at this stage is to promote the narrative that Gulf producers
cannot be trusted, or that oil as a commodity cannot be relied
upon. That is counterproductive and not useful to the global
economy. We urge people to take those comments with extreme
caution," he added.
Role of oil in long-term energy security amid energy
transition
Haitham Al Ghais said OPEC's message has always been that oil
will remain a fundamental aspect and a fundamental pillar to the
global economy.
"It has been for so many years and decades, and it will continue
to be. We just launched our updated World Oil Outlook to 2050,
which shows clearly that oil will still remain dominant in the
energy mix until 2050, at around 30% of the energy mix. When you
add gas to that equation, we are talking about oil and gas combined
accounting for nearly 55% of the global energy mix. Again, this
brings me back to the point I said about all these people talking
about energy transition for many years, almost equating energy
transition with abandoning oil and gas. We at OPEC talk about
energy transitions and energy addition, because energy consumption
in the world will grow at such a significant rate. We believe it
will grow by around 23% from now to 2050. Of course, oil will be a
major component of that. In addition to the growth we will see in
renewables, we will see growth in gas. But it should not be
interpreted as if this will replace oil and gas. We see the only
source of energy that will be on the decline is coal due to climate
and environmental concerns. That's why we at OPEC believe in the
importance of continuing to invest in oil and in gas, and as well
in renewables," said OPEC's secretary general.
Noting that not all of OPEC member countries are investing in
all sources of energy, he said OPEC doesn't target or exclude any
form of energy under the name of climate change or trying to deal
with climate matters.
'The whole Paris Agreement is actually centered on dealing with
emissions from all sources, not just from oil and gas. So again, we
caution against using the energy transition as a means to pushing
for another agenda, which is abandoning oil and gas. It should not
be the case. Oil is fundamental. You see it in every single aspect
of our daily lives, be it transportation, clothing, flights,
shipping, packaging, sports equipment. Since we're talking about
the World Cup these days, everything you see, even the football
they play with is made of petrochemical derivatives. It is in every
aspect in our daily lives that people cannot even imagine. That's
why it's important to support this commodity, to make sure that
it's a stable commodity, because it impacts the daily lives of
people all around and the livelihood of people. That's what we try
to do through the OPEC+ cooperation, making sure that we have a
stable market to support the global economy through this oil,
because 30% of global energy consumption is from oil," he
explained.
OPEC’s perspective on oil prices and investment
needs
Haitham Al Ghais recalled that OPEC does not comment on oil
prices and doesn't even forecast the prices.
"I think the prices are a function of so many different
elements, fundamentals and non-fundamental factors that we focus on
the stability between the supply and the demand. That's what we do
through the Declaration of Cooperation and we have been doing it
successfully. Now, we can talk about what levels of investment are
needed. According to our outlook, we need almost $700 billion per
year to sustain the oil industry. That means from now to 2050,
almost $18 trillion in total. That covers the upstream, downstream
and midstream industry. That's significant, and that's what we try
to promote through making sure that the market is stable, that
there is an investor-friendly appetite. We have seen that
declining, of course, over the years when there is a big
oversupply, and the environment is not conducive for investments.
But also, I think, irrespective of the price, I'd like to circle
that back to what we were talking about earlier regarding the
narrative about abandoning oil and gas. The International Energy
Agency said that 2030 is the end of the era of oil and gas. Yet
every year, we are seeing a new record for oil demand. 2030 is less
than five years from today. For the last 10 years, they have been
forecasting that oil demand would peak and that it would be on the
downward trend for the rest of the decade. But this is not
happening. That is why it is important to focus not only on the
price levels that enable and incentivize investment, but equally on
the messaging that creates confidence in the future of the industry
and encourages continued investment in oil and gas rather than
discouraging it," OPEC's secretary general concluded.
