OPEC: Global energy demand to rise 23% by 2045

OPEC's latest World Oil Outlook report has painted a bullish picture for the future of oil demand, with projections indicating a significant increase to 110.2 million barrels a day by 2028. The report outlines that the largest contributions to the non-OECD oil demand growth are expected to come from key regions such as India, China, Africa, and the Middle East. To delve deeper into these numbers and recommendations, Chinnan Dikwal, Vice Chair of the African Energy Council, joined CNBC Africa in a detailed discussion. Taking a closer look at the key points highlighted in the OPEC report, Dikwal emphasized the substantial revision in the forecast for oil demand. Last year's forecast of a 114 million barrels per day by 2045 has been revised upwards to 116 million barrels per day in the latest report, indicating a robust growth trajectory far into the future. The growth is attributed to factors such as increasing GDP, population, urbanization, and industrialization, particularly in regions like China, India, the Middle East, and Africa. However, a key point of contention arises when comparing OPEC's optimistic outlook with that of the International Energy Agency (IEA). While OPEC projects a continued rise in oil demand, the IEA anticipates a more subdued growth pattern with a significant shift towards renewable energy sources such as solar and wind. This discrepancy raises critical questions about the future energy landscape and the role of fossil fuels in achieving sustainability goals. One of the striking revelations from the report is the prediction that wind and solar energy will experience the fastest growth rates, yet oil is anticipated to maintain the largest share in the energy mix. This juxtaposition underscores the challenges faced in transitioning to cleaner energy sources while still relying heavily on oil. With policies advocating for a reduction in fossil fuel usage and a push towards net zero emissions, the coexistence of traditional energy sources alongside renewables poses a complex dilemma. Addressing the issue of energy demand growth, the report underscores the significant role that non-OECD countries, particularly India, will play in driving future energy consumption. India is projected to contribute a substantial 28% of the non-OECD growth, fueled by rapid economic expansion and innovative developments within the country. Additionally, regions like Africa and the Middle East are expected to see notable growth due to demographic factors, including a large working-age population. Nevertheless, the report highlights the critical need for substantial investments in the oil sector to meet the escalating demand. OPEC estimates that investments totaling $14 trillion will be required between 2022 and 2045, averaging $610 billion annually. This staggering amount poses a challenge in light of evolving legislative measures, such as the Carbon Border Adjustment Mechanism (CBAM) introduced by the EU, which could deter companies from investing in oil. The divergence in forecasts between OPEC and the IEA underscores the uncertainties surrounding future energy trends and the pivotal role of investments in shaping the industry landscape. While OPEC remains optimistic about sustained oil demand growth, concerns linger regarding the alignment of these projections with global sustainability objectives. Navigating the energy transition will necessitate a delicate balance between traditional energy sources and renewable alternatives, as stakeholders grapple with the multifaceted challenges posed by evolving market dynamics and regulatory frameworks.