Haitham al Ghais, the Secretary-General of the Organisation of Petroleum Exporting Countries (OPEC), wrote in a July 29 article that the call to electrify everything would involve using crude oil.
OPEC Secretary General Haitham al Ghais argues that crude oil plays a crucial role in global electrification and that energy sources should not be viewed as competing in a zero-sum game.
Al Ghais’ article dispels the notion that energy sources must compete against each other and urges policymakers to understand the interconnectedness of energy systems and the realities of supply and demand.
He emphasizes that petroleum and its derivatives are indispensable across various sectors, including electricity transmission, where they are vital in manufacturing, maintaining, and installing critical infrastructure components.
Key points on the importance of crude oil in electrification
Insulation materials for cables – Petroleum-derived products are essential for insulation materials used in underground and subsea cables, which connect offshore wind farms to the grid. Insulation sheaths, comprising around 40% of a cable’s weight, are made from cross-linked polyethylene, polyvinyl chloride, and cross-linked ethylene-propylene polymer.
Transformers and voltage regulation: Transformers, crucial for adjusting voltage levels, rely heavily on petroleum products. A petroleum distillate transformer oil insulates and cools the windings and core, making up nearly a quarter of a large power transformer’s weight. According to the International Energy Agency (IEA), this oil is vital for the stable operation of transformers.
Transportation and construction: Equipment necessary for electrification is transported using vehicles powered by gasoline, diesel, aviation, and marine fuels. Specialized vehicles, such as cable-laying vessels and construction materials for infrastructure, including steel, aluminium, copper, and concrete, require petroleum products.
Supply chain and grid expansion: Achieving ambitious electrification targets necessitates a massive electricity grid expansion. The world currently generates 27,000 to 30,000 Terawatt hours (TWh) of electricity, which needs to increase to 90,000 to 130,000 TWh to reach net zero emissions by 2050. This expansion will pressure supply chains, including those for petroleum-derived products, crucial for constructing and maintaining grid infrastructure.
Investment in the oil industry: Al Ghais and OPEC emphasize the need for continued investment in the oil industry to ensure a stable supply of petroleum products. Halting new oil project investments could jeopardize the production of these essential products, impacting the electricity grid’s functioning and expansion.
Energy sector interconnectedness: OPEC advocates for a balanced view, recognizing that all energy sources will be necessary to meet future demand, reduce emissions, tackle energy poverty, and ensure energy security. They stress that oil will remain a vital component of the global energy mix, particularly its role in supporting other sectors, like electricity.