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Oil Demand, Emissions Discussed by OPEC, COP28 Chief

FILE The Dangote refinery during the opening ceremony in Lagos, Nigeria, Monday, May 22, 2023. OPEC members say attention should be on cutting demand for oil

VIENNA — OPEC ministers and executives from oil companies told a two-day conference in Vienna governments needed to turn their attention from supply to demand. But Sultan al-Jaber, head of the COP28 Climate Summit, told OPEC the industry must decarbonize and eliminate operational emissions.

"We must invest in the energy system of today as unpopular as it sounds ... If we don't, we will have a mismatch of supply and demand," BP Chief Executive Bernard Looney said, according to a source present at the OPEC conference in Vienna.

Companies such as Shell and BP have slowed plans to reduce fossil fuels output.

There are climate activists and some investors placing pressure on oil and gas producers to shift their portfolios towards zero-carbon renewable energy to tackle global warming.

Record profits from oil and gas last year and relatively low returns from renewable energy prompted some investors to demand companies renew their focus on oil and gas to raise profits.

The oil industry has long said lower investment in oil and gas in the absence of a reduction in oil demand will only lead to higher prices.

"The mistake is to think that if we diminish the investments in the existing system, in oil and gas, then the money will be transferred. No. The reality is if we do it that way, the price will go back up," Patrick Pouyanne, the chief of France's top company TotalEnergies, said.

This, as Sultan al-Jaber, head of the UAE national oil company ADNOC, told the OPEC conference the entire industry "should be aligned" to help the world meet the target of net-zero greenhouse gas emissions by 2050.

This includes not only international oil companies but also national state-controlled ones, al-Jaber told conference attendees.

While a number of multinational companies have stated their emissions-reduction aims, many state-held giants such as ones in the Gulf, China and Iran have yet to set clear targets.

The "operational emissions" al-Jaber referred to are the upstream carbon gases released during production and account for 15-20% of the companies' carbon output.

Al-Jaber urged the producers also "to accelerate an industry-wide commitment to reach near zero methane emissions by 2030."

Methane is a potent greenhouse gas and escapes in large volumes from gas fields and pipelines.

"If we do this, that takes care of a massive proportion of scope 1 and 2 emissions," he said.

Al-Jaber repeated his warning that energy demand will continue to rise, forcing producers to "massively scale up clean energies ... while also sustaining socio-economic development."

Oil demand has reached new peaks of above 102 million barrels per day this year, recovering from a dip during the COVID-19 pandemic. It is expected to rise further, driven by strong demand from Asia and for petrochemical production, oil executives and analysts said.

This report was compiled from information from Reuters and Agence france-Presse.