COP29: OPEC head tells Baku summit oil and gas are 'gift from God'

OPEC Secretary General Haitham al-Ghais used his speech at the UN Climate Change Conference in Baku on Nov. 20 to emphasize the pivotal role oil and gas continue to play, dubbing hydrocarbons a "gift from God," as the producer group looks to stamp its narrative on the world's leading climate event.

Ghais was echoing somewhat controversial opening comments on Nov. 12 by Ilham Aliyev, the president of OPEC+ member Azerbaijan, which is hosting COP29.

"Petroleum and petroleum-derived products continue to shape how we heat and cool our homes, construct our buildings and transport ourselves from A to B," Ghais said, pointing to the role of hydrocarbons in food production and transportation, as well as medical research and manufacturing.

"However access to the benefits of these products, benefits unfortunately often taken for granted, is far from universal," he added, noting that 685 million people lack electricity access -- most of them in Africa -- and 2.1 billion rely on unsafe cooking fuels.

The challenge, Ghais said, is to ensure energy access and meet future demand while reducing emissions. As a result, the Paris Agreement, signed in 2015, which saw countries agree to restrict global warming to 1.5 C above pre-industrial levels, should focus on cutting emissions, not rejecting energy sources, the secretary general added.

Parties at the summit were inching toward an agreement on Nov. 20 to mobilize financing to help nations trim emissions. The last COP agreement, agreed in Dubai in 2023, was held up partly by oil producers opposing suggestions of a fossil fuel "phase out," sources told S&P Global Commodity Insights at the time.

Unlike other forecasters, including the bearish International Energy Agency and Commodity Insights, OPEC, which sees itself as the swing producer in the crude market, does not see oil demand peaking through 2050, insisting rising consumption in non-OECD nations will drive demand ever higher.

Indeed, the fact that 600 million people in sub-Saharan Africa lack access to electricity has become a rallying cry for OPEC+, which includes African producers -- Nigeria, Equatorial Guinea, Gabon, Republic of Congo, Sudan and South Sudan.

Meanwhile, OPEC has claimed that warnings of peak oil could sap vital investment needed to meet global demand in the absence of scalable alternative energy sources.

Its members hold 79.1% of the world's proven crude reserves, equivalent to 1.24 trillion barrels, and expect to be the last men standing in the oil market due to their relatively low cost of production. Nevertheless, with members' budgets underpinned by oil revenues, OPEC has pushed back against efforts to restrict fossil fuel use.

The Vienna-based group has suggested new technologies, such as carbon capture and reductions in flaring, can help reduce the climate impact of oil and gas, but critics claim such technologies will only prolong fossil fuel use.

"OPEC has consistently advocated a balanced approach where nothing and no one should be dismissed," Ghais told COP29 attendees. "We need to embrace all energies, leverage all available tech and ensure that the needs of all peoples around the world are taken into account."

The heavy presence of the oil and gas sector did not go unnoticed at the world's largest climate summit, with oil majors, smaller companies and organizations such as OPEC out in full force.

'Transitioning away'

Last year at COP28, world leaders agreed to work toward "transitioning away from fossil fuels" despite stiff opposition from various oil producers including OPEC.

This year, many parties including the EU sought further details on the measures needed to accelerate the shift from oil, gas and coal, amid pressure to reaffirm that commitment pledged in Dubai, prompting significant pushback from petrostates like Saudi Arabia, with a number of them negotiating text excluding the words "transitioning away from fossil fuels."

In the latest text of the so-called UAE dialogue, which builds on last year's commitments, there was nevertheless a passing mention.

The UAE dialogue "will provide a space for consideration of the energy transition in developing countries, including action and support for their transition away from fossil fuels, and innovative solutions for both developed and developing countries," it says.