An offshore oil rig offshore in Huntington Beach, California on April 5, 2020.
Leonard Ortiz | MediaNews Group | Orange County Register | Getty Images
DUBAI – Oil exploration group OPEC will further strengthen its relationship with the US energy industry under the new administration of Joe Biden, oil cartel general secretary Mohammed Barkindo told CNBC on Tuesday.
This is happening in spite of the democratic leader’s declared commitment to combating climate change and focusing on renewable energies.
Barkindo congratulated Biden on his upcoming inauguration during a virtual panel hosted by the Atlantic Council’s Global Energy Forum and said, “We are deepening this relationship that we have all found mutually beneficial.”
“And we intend to continue that fashion and administration of President Biden,” he said in an exclusive interview with CNBC’s Hadley Gamble.
OPEC leaders were known to have communicated at times with outgoing President Donald Trump, who was particularly vocal and active in talking about the oil markets and what he believed oil-producing countries should do to change crude oil prices.
Biden’s likely change in approach, as well as his focus on investing in non-oil energy sources, has reportedly unsettled some members of the 13-strong oil exploration group. The possible return of the president-elect to the Iranian nuclear deal, which could bring millions of barrels of new oil to the market, has also raised concerns.
The OPEC chief has been diplomatic when it comes to discussing US presidents, but some in the organization are wary of Biden, according to sources cited by Reuters.
When asked if he had any contact with Biden, Barkindo replied, “No, not at all.”
“We believe we have developed very mutually beneficial industrial relationships in the US, and I think we have no choice but to further strengthen that relationship under President Biden,” he added.
Climate change under Biden
Dan Yergin, a longtime expert on the oil industry and founder of IHS Markit, said on the same panel that Biden’s biggest impact on the oil industry would be his commitment to climate change action.
“I think he will step on the gas on the climate,” said Yergin. He expects the administration to provide “incentives for electric vehicles … for solar, wind and other regulations (for the oil industry) on a broad front”.
The bitter truth is that a clean energy transition is coming and coming very quickly.
International Energy Agency
Biden has described climate change as one of the four biggest crises in the US and plans to rejoin the Paris Climate Agreement on his first day in office. Trump withdrew from the climate agreement in 2017.
Looking ahead, global trends in energy and climate could worry OPEC member states far more than anyone else in the White House.
“There is one thing that is extremely important to understand,” said Fatih Birol, executive director of the International Energy Agency, during the panel. “The share of oil in the global energy markets will decrease. The speed of this decline will be determined by the speed of the energy transition.”
“The bitter truth is that a clean energy transition is coming and very quickly,” said Birol.
He also said the world should expect more innovations like carbon capture, hydrogen power, electric vehicles, and new generation of nuclear power.
“The US political position will send unmistakable signals to investors around the world,” he added.