A key concern for global energy markets has been the return U.S. shale production, said Joseph McMonigle, Secretary-General of the International Energy Forum (IEF), the largest international organization of energy ministers from 70 countries.

In an exclusive video interview with Hart Energy’s Faiza Rizvi, McMonigle said that the IEF is closely monitoring the production in the U.S., which is the largest source of non-OPEC supply.

 “We have a message to companies who we understand have commitments to shareholders and have to be responsive: Don’t lock in plans for 2021 but reassess as the world reopens and the demand picture becomes clear,” he said.

McMonigle noted that even pre-pandemic, U.S. production was already slowing due to a drop in investments in response to lower shareholder returns and an increasing focus on ESG focus. As returns increase, though, more capital will return to the shale sector, he said, which will eventually impact production and be important to meet the expected surge in global demand for oil and gas.

The industry veteran also spoke about the demand outlook that was outlined during the joint symposium by IEF and OPEC held earlier this year to examine the impact of the COVID-19 pandemic on global energy markets, energy security and market stability.

Even though energy transition and climate goals continue to be a major focus for IEF’s member countries, McMonigle said one of the key takeaways at the symposium was that the world will rely on hydrocarbons even after 2040.

“While certainly the impact to demand was profound and unprecedented, I think it’s all important to recognize that 90% of demand remained intact, which I think demonstrates oil’s resiliency and necessity to fuel the world economy,” he said.

Further, he said investments in oil and gas will be needed to avoid a crisis. The IEF in collaboration with BCG published a report last year that outlined how investment cuts by oil and gas companies could spur higher prices and volatility.

According to the report, investments in the oil and gas sector will have to rise over the next three years by 25% yearly from 2020 levels to stave off a crisis and “substantially greater sums will be needed by the end of the decade to ensure sufficient production to guarantee market stability,” he said.

Jump to a topic:

  • Need for investments (0:40)
  • Demand recovery in 2021 (2:55)
  • U.S. shale production outlook (4:54)
  • Renewables versus fossil fuels (7:40)
  • Path Forward for the oil and gas industry (11:17)
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