OPEC Secretary General Haitham Al Ghais has emphasized the critical role of oil and petroleum-based products in advancing global electrification and expanding power grids.
In an article on the OPEC official website, Al Ghais asserted that “OPEC does not believe that energy sources are locked in a zero-sum game; nor can the history of energy be reduced to a succession of ‘energy replacement events.’ Reality tells us that oil does not operate in isolation, cut off from other sectors and industries. Rather, such is the versatility of petroleum and petroleum-derived products that they play an indispensable role in a host of other sectors and industries.”
Al Ghais highlighted the importance of petroleum products in the electricity sector, noting their use in power generation, wind turbines, solar panels, and many end-use electrical appliances. He stressed the necessity of these products in the transmission of electricity, crucial for manufacturing, maintaining, and installing cables, overhead lines, pylons, transformers, substations, and control systems.
“A very clear example of this is the insulation materials required to ensure the safety of underground and subsea cables. These are particularly important in connecting offshore wind farms to the grid,” he said. “Underground electric cables need insulation sheaths, which often make up around 40% of the weight of the cable. Typical materials used for this purpose include petroleum-derived products such as cross-linked polyethylene, polyvinyl chloride, and cross-linked ethylene-propylene polymer.”
Al Ghais also pointed out the critical role of transformers in electricity transmission. “Transformers are crucial, as they transfer electrical energy from one electrical circuit to another circuit or multiple circuits, either stepping up or stepping down voltage levels,” he explained. “For transformers to operate properly, transformer oil is essential. It insulates transformers and ensures that they can function at a stable temperature. These are primarily made from mineral oil, a distillate of petroleum.”
Quoting the International Energy Agency, Al Ghais added, “Mineral oil is used in all types of transformers to insulate and cool the transformer windings (copper coils) and core.” He noted that nearly a quarter of the weight of a large power transformer consists of transformer oil and insulation materials.
The expansion of the electricity grid places pressure on supply chains, posing challenges for grid development in the coming years. Al Ghais stressed the importance of recognizing that these supply chain risks affect all materials used in grid construction, including petroleum-derived products.
“Commentators often emphasize the risks for critical minerals while assuming a safe and secure supply of petroleum-derived products. However, as OPEC has repeatedly highlighted, the security of supply in crude oil—and its consequential effects on petroleum products—can only be ensured with adequate and timely investments in the oil industry. In other words, calls to halt new investments in oil projects jeopardize the production of oil products essential for the smooth functioning and expansion of the electricity grid.”
OPEC Member Countries have clear national electrification plans, driven by the shared belief that all energy sources will be necessary to meet future demand growth, reduce emissions, tackle energy poverty, and ensure energy security.
Al Ghais concluded that OPEC believes oil will continue to be a vital component of future energy pathways, given the essential role of petroleum products in various sectors, including electricity. He urged policymakers to dispel the notion that energy sources must compete against each other and to approach energy realities with a clear-headed perspective.