Cutting investments in oil and gas production is misguided, said the secretary-general of OPEC Mohammed Barkindo at the World Petroleum Congress.
"If the necessary investments are not met, it could have knock on implications and leave long-term scars, particularly for security of supply – affecting not only producers but consumers too," the official said, as quoted by Reuters.
Barkindo's comments come on the heels of a report by IHS Markit and Saudi-based International Energy Forum, which said upstream investments actually need to increase to avoid energy crunches in the future.
This year's investments in new oil and gas production were 25 percent below the level of investments in 2019, the last year before the pandemic, the authors of the report added. Demand, meanwhile, is rebounding and set to rise further, especially in developing countries.
Barkindo echoed the warning, saying insufficient investment in new oil and gas supply would lead to energy shortages, as well as market imbalances and higher prices.
"Climate change and energy poverty are two sides of the same coin. We need to ensure energy is affordable for all; we need to transition to a more inclusive, fair and equitable world in which every person has access to energy," he said.
According to the IHS/IEF report, the next two years will be of critical importance for securing new oil and gas supply for the next five to six years.
"Insufficient upstream investment would result in more price volatility and spur adverse economic consequences," the two said.
Yet another warning along the same lines came earlier this week from Aramco's chief executive Amin Nasser. Nasser said that the world still needed oil and gas if it wanted to avoid "energy insecurity, rampant inflation, and social unrest as the prices become intolerably high and seeing net-zero commitments by countries start to unravel."
By Irina Slav for Oilprice.com
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