Vienna – aThe Organization of Petroleum Exporting Countries (OPEC) asserted that the global refining sector needs to continue pumping billions of dollars in investments in the coming years in order to keep pace with the growing demand and cut off the possibility of recording a shortage in the fuel markets.
OPEC Secretary General Haitham Al-Ghais estimated, during an interview with S&P Global, and reported by Bloomberg Agency on Friday, that the investments required to be pumped into this industry are about $1.6 trillion, at a minimum.
“It is important that these measures (investments) be taken urgently to avoid fuel shortages, as the demand for oil will increase even more in the coming years,” he said.
Al-Ghais explained that the global surplus production capacity has shrunk, and the refining sector is not keeping pace with the increasing demand for fuel, which exposes the world to the risk of supply shortages in the future.
The Secretary General of OPEC, during his media statements, has always opposed the International Energy Agency because of its criticism of the organization’s production cuts and its messages about the energy mix.
He believes that the oil industry needs significant investment, but it finds itself in an increasingly difficult financial environment, exacerbated by “unhelpful criticism and misleading narratives” about fossil fuels.
It cannot be ignored that the war, which broke out more than a year ago between Russia and Ukraine, has increased pressure on the global refining industry, at a time when it was beginning to catch its breath after lifting the closure restrictions due to the Corona crisis.
What makes most countries, whose refineries have struggled to meet the global demand for gasoline, diesel and jet fuel products since February 2022 despite the high prices, is that there is a climate preoccupation that prompts them to think deeply about how to gradually clean up this vital sector.
The petrochemical sector in many countries of the world, and the Gulf countries in particular, faces a challenge represented in accelerating keeping pace with the technological boom by redefining, shaping and innovating the work of this important industry for the economies of the region.
It is clear in recent years, the lack of investment in the refining sector, despite attempts by oil countries to focus on it, particularly in the countries of the Organization for Economic Cooperation and Development.--
“For example, the most recent addition to a large-capacity refinery in the United States was the Marathon facility in Louisiana, which began production in 1977,” Al-Ghais said.
During the two years of the pandemic, refineries with a capacity of 3 million barrels per day were closed, mostly in OECD countries, and this led to diesel and gasoline stocks falling to well below the current five-year average.
Nevertheless, OPEC member states now continue to invest heavily in the oil industry, especially in refining operations, especially in the UAE, Saudi Arabia, Kuwait and Nigeria.
The most recent examples include the Ruwais project of the UAE’s ADNOC, and Saudi Aramco has also made significant investments in refiners in China.
There are other important projects in the sector as well, including the clean fuel project, the Al-Zour refinery in Kuwait, which entered production last year, as well as the Dangote refinery project in Nigeria.
“We have to realize that the future of refining operations will be directed more towards building more complex refineries,” Al-Ghais said.
He pointed out that to add value, it is no longer just about making profits by refining crude oil, but by integrating petrochemical production processes with it.
“There is a growing trend to merge the petrochemical business with the refining business to achieve maximum value,” he added.
OPEC expects oil and gas exploration and production investments in producing countries outside the organization to rise by 10 percent to $474 billion this year.