OPEC said in its annual World Oil Outlook on Monday that the world needs $14 trillion in cumulative investment in the oil sector by 2045 to ensure market stability and avoid energy and economic chaos.
Annual investment needs to average about $610 billion, the bulk of which should go to the upstream segment, the cartel said, rejecting calls to halt investment in new supply.
Cumulative upstream investment needs to be around $11.1 trillion by 2045, or an average of $480 billion per year. Downstream and midstream needs are estimated at $1.7 trillion and $1.2 trillion, respectively, through 2045.
Failure to make these investments poses a significant challenge and risk to market stability and energy security,” OPEC said in the annual report, which also raised its long-term oil demand forecast to 116 million bpd in 2045, up 6 million bpd from that year’s demand in the 2022 annual outlook.
“Ensuring that these investments are made and sustained is a key challenge and of paramount importance for oil market stability and security of supply,” OPEC said in the 2023 outlook.
This year, upstream investment is set to rise 13% to $360 billion, but that will only bring capital spending back to pre-pandemic levels.
“Hurdles to upstream investment, or even calls to curtail investment, are not helpful in this regard and increase the risk of supply disruptions and market volatility,” the cartel warned.
OPEC Secretary General Haitham Al Ghais said in the foreword to the report,”Calls to halt investment in new oil projects are misguided and could lead to energy and economic chaos.
“History is replete with examples of turmoil that should serve as a warning of what happens when policymakers fail to recognize the interwoven complexities of energy,” Al Ghais said.