OPEC's Barkindo on lost $1 trillion energy investment: 'Sowing seeds for future global energy crisis'

  • OPEC Secretary General Mohammad Barkindo told CNBC on Tuesday that the recent lack of investment in the energy industry could lead to a global energy crisis.
  • The contraction in investment from oil investors and creditors during the 2015–2016 oil downturn reached $1 trillion and needs to be reversed.

OPEC Secretary General Mohammad Barkindo said one of the most important issues the energy industry currently faces is a lack of investment. The oil industry experienced a $1 trillion shortfall during the 2015–2016 downturn, Barkindo told CNBC in an interview from IHS Markit's CERAWeek conference on Tuesday, and that is not healthy for the continued growth of the industry in the medium- to long term, he said.

The OPEC head said the fundamentals of supply and demand are strong, and he noted that the 100-million-barrel-a-day mark is being approached for the first time in history. But the consensus emerging at CERAWeek is that "if trend of past few years continues ... God forbid, we would be sowing seeds for a future global energy crisis nobody wants to see," Barkindo said.

During the oil glut of the past few years, severe volatility became the norm and there was lack of certainty on how long the cycle would last, Barkindo said, adding that the fallout of the cycle impacted investment activity very negatively.

"There is no doubt that the financial markets are continuing to have an impact on oil, particularly on physical oil," he said at CERAWeek on Monday. "This is one area that we have been battling to understand the dynamics and complexities of sophisticated markets."

He told CNBC that OPEC officials met with hedge funds and others in the financial community on Monday in Houston.

The head of Saudi Aramco said at CERAWeek that the oil industry will need $20 trillion in investment over the next 25 years.

OPEC is optimistic that this investment issue will come back to the forefront of the energy industry agenda. "We need to catch up with the lost investment opportunities in order to restore stability on a sustainable basis," Barkindo said. "The lack of certainty is a big concern for investors."

The OPEC Secretary General also met Monday evening with U.S. shale produces, after an initial meeting at the conference a year ago. "There's a very rich lesson to be learned from producers in this basin," he said of U.S. shale plays on Monday.

Until last year meetings between us oil producers and OPEC were unprecedented. OPEC 's Barkindo and several oil ministers met with the industry on the sidelines of CERAWeek last February and for a second time Monday night

"We compared notes on our experiences in this cycle which everyone agreed was the most injurious. We asked to share with us and the rest of the works their very rich experience," Barkindo said at the conference on Monday.

More from CERAWeek:

OPEC wants to talk to rival shale drillers to learn lessons of oil glut

Saudis and US, seen as rivals, are actually growing together: Aramco CEO

Saudi Aramco looking to Google parent Alphabet to build tech hub

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