The energy transition presents a complex challenge, but the oil industry is committed to being part of the solution by providing extensive resources and expertise that can help unlock our carbon-free future
Every year typically has a number of defining moments, but 2020 has truly been epoch shaping, with a plethora of global, paradigm-changing events led by the COVID-19 pandemic. It has left a trail of destruction: a global health crisis that has hit people, businesses, industries and countries around the world.
For the oil industry, the impact of COVID-19 was unprecedented. Back in March and April 2020, businesses were haemorrhaging fast, market fundamentals were being completely upended and everyone was scrambling for answers to try to stop the bleeding.
With the Kingdom of Saudi Arabia at the fore, led diligently and judiciously by King Salman bin Abdulaziz Al Saud, Crown Prince Mohammed bin Salman Al Saud and Prince Abdulaziz bin Salman Al Saud, minister of energy, the Organization of Petroleum Exporting Countries and its non-OPEC partners in the Declaration of Cooperation embarked on putting together an agreement to help navigate this once-in-a-lifetime storm.
At two extraordinary meetings on 9 and 12 April, DoC participants agreed to new voluntary production adjustments, the largest and longest in the history of the oil industry, with the decisions further reinforced at ministerial meetings on 6 June, focused on rebalancing and stabilising the market, in the interests of both producers and consumers.
It was incredible to see the high level of diplomacy involved in putting together those critical decisions, with talks among the world’s largest producers, including the United States for the first time, as well as others outside of the DoC, such as Alberta in Canada, Brazil and Norway.
The G20 also played a positive role, with the convening of an extraordinary meeting of G20 energy ministers on 10 April, who expressed a commitment to work together “in the spirit of solidarity”. They also recognised the commitment of the producers in the DoC group to stabilise energy markets and acknowledged the importance of international cooperation in ensuring the resilience of energy systems.
Slowly but surely we are seeing tentative indications of an oil market recovery. But it is clear we are not out of the woods yet, particularly with the pandemic still widespread. We remain vigilant, ready to take any necessary action, and welcome the support of the G20 for this vital global industry.
Broader, deeper dialogue
The type of dialogue and cooperation exhibited this year has always been front and centre of OPEC’s modus operandi, and we continually look to broaden and deepen the scope. This will be critical not only in meeting the direct challenges brought on by COVID-19, but also when looking at the longer-term challenges, specifically related to the environment, climate change, sustainable development and the much discussed energy transition.
OPEC remains fully engaged and supportive of the United Nations Framework Convention on Climate Change and the Paris Agreement, which remain the only viable global frameworks to address climate change. It is our deeply held conviction that dialogue on this matter should be inclusive and broad, to try to evolve this energy transition in the least disruptive manner.
We need to think carefully about what an energy transition actually means, and we all need to follow the right paths to lead us to a sustainable energy future.
We need to transition to a more inclusive world in which every person has access to energy. A world where no one is left behind
To put it simply, the basic challenge of the energy transition we face today can be summed up in two questions. How can we ensure there is enough supply to meet expected future demand growth? And how can this growth be achieved in a sustainable way that balances the needs of people in relation to their social welfare, the economy and the environment?
It all points to not limiting ourselves by putting all our eggs in one basket. We need to look for cleaner and more efficient technological solutions everywhere, across all available energies.
At OPEC, we recognise the complexity of the challenge. Complex problems require comprehensive solutions. The oil industry will continue to be part of the solution – it possesses extensive resources and expertise that can help unlock our carbon-free future.
Just as the COVID-19 pandemic brought new avenues and countries together for cooperation, so does the energy transition require a broad vision. We need to all work together, step by step, to find issues of commonality and appreciate what is at stake.