Instability weighing on oil investment: Update

Adds Opec secretary-general comments

A lack of stability is holding back energy sector investment, and Opec+ is leading the way in trying to tackle the problem, UAE energy minister Suhail al-Mazrouei said today in his latest defence of the group's decision to cut production.

"It's difficult to name other organisations like Opec or Opec+ that are trying to reduce the fluctuations," he said. "We need stability, more investments, we have lost investments in many countries, and we need both the financial institutions and the [international oil companies] IOCs to bring more."

Opec secretary-general Haitham al-Ghais echoed the call for more investment in his keynote speech today at the Africa Energy Week conference in Cape Town: "Cumulative oil-related investment requirements from now until 2045 are estimated to total $12.1tn. Of this, $9.5tn will go to upstream projects, $1.6tn to the downstream and $1tn to the midstream," he said. "If these investment needs are not met, we could eventually see a supply shortfall, resulting in heightened volatility."

Al-Ghais stressed that the Opec+ goal of stabilising oil markets is a "pre-requisite for investor confidence and increased investment going forward."

Opec+ officials have been citing market stability and economic considerations in defence of the group's decision to cut its production quota by 2mn b/d, starting in November. The policy has been criticised by the US, which has questioned the group's motives. Al-Mazrouei today reiterated that the group's "technical decision" was correct, unanimous and had nothing to do with politics.

Al-Mazrouei is among several Opec+ oil ministers and oil ministries to go on the record in the past few days to defend the quota cut and rally behind Saudi Arabia, which has been at the sharp end of Washington's criticism. The US accused Riyadh of siding with Russia and forcing some other Opec+ members to support the cut.

Asked whether it was wrong for the White House and the US Congress to call out Saudi Arabia and other Opec members over the decision to slash output quotas, al-Mazrouei said: "We are not politicising the decision. This is an organization [Opec] that has lasted 60 years and we've been taking all our decisions in the same professional and technical way," he said.

Al-Mazrouei also reaffirmed the UAE's longstanding plan to increase its crude production capacity to 5mn b/d by 2030. He left the door open to the possibility that the UAE might ask for a higher baseline quota within the Opec+ agreement to reflect its expansion plan. There is a mechanism for any member country to raise such a request, he said, adding that he will "leave that to discussions within the organisation". Sources familiar with the matter told Argus in September that the UAE is considering accelerating the capacity growth

By Bachar Halabi, Nader Itayim and Ruxandra Iordache