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African Energy Week 2024 presents the vision of a diversified energy future

AFRICAN ENERGY WEEK: OIL & GAS DEMAND EXPECTED TO REMAIN STRONG THROUGH 2050

Global demand for oil and gas is expected to remain strong in the coming decades, according to Haitham al-Ghais, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC). Speaking at the  Africa Energy Week (AEW) in Cape Town,  South Africa, on 6 November, Haitham al-Ghais explained that this increase in energy demand would be driven by global population growth and a doubling of global GDP by 2050. “OPEC sees the outlook for global oil and gas consumption as very positive. By 2050, energy demand will increase by 24%,” he said.

The world population, currently 8 billion, is expected to reach 9.7 billion by 2050, with a significant share of this growth concentrated in developing countries, particularly in Africa. Al-Ghais stressed that this population increase and the economic growth of emerging megacities and cities of several million inhabitants would amplify the demand for energy, requiring the mobilization of all available resources, including fossil fuels.

The leading role of oil and gas

According to OPEC projections, oil and natural gas will still account for 55% of global energy supply in 2050, with oil alone accounting for 30% of this share. “The world will need all kinds of energy resources in the coming decades,” the OPEC Secretary General said, adding that renewables, although growing, will not be enough to meet this increased demand. In order to meet the growing needs and stabilize markets, OPEC estimates that massive investments will be needed in the oil sector. “Until 2050, the oil sector will require investments of $17.4 trillion,” al-Ghais said, adding that this funding will be mainly directed towards production programs to ensure stable supplies and prevent sudden fluctuations in fuel prices.

A strategic event for the sector

The African Energy Week, which brings together over 1,000 participants, including officials from 22 African countries, industrialists, business people and analysts, continues until November 8. The event provides a platform to discuss energy challenges in Africa and how the continent can meet the growing global energy needs.

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Last year, global demand for loans in the oil sector decreased by 6%, but this doesn't imply a halt in investment. The debt-to-profit ratio of companies has shifted in favor of profits since 2020. Average oil and gas companies now generate more revenue than needed to cover capital expenditures through the end of the decade, potentially eliminating the need for loans. Major industry players like Chevron Corp. and Saudi Aramco are examples of this trend.

#crudeoil  #oilcompanies  #fossilfuels  #oil &gas
This financial autonomy also impacts environmental efforts. Previously, bank loans could be leveraged to pressure companies into reducing extraction and emissions. Now, without such financial dependencies, companies have more control over their production volumes, which could delay global goals aimed at curbing the growth of hydrocarbon energy.

Source: Tim Quinson, 29^th Apr 2024, Bloomberg