OPEC s View on the Outlook for Oil Supply/Demand Mohammed Barkindo Acting for the Secretary General 7 th International Oil Summit 7 th April 2006 Paris, France
Introduction Energy security must be seen from many perspectives Security of supply and security of demand go hand in hand Recent price behaviour has moved the issue of energy security high up on the agenda Non-energy commodity prices have also risen Perceptions of capacity availability exacerbated by disruptions to the supply system and other factors OPEC s recent responses demonstrate the commitment to support energy supply security
Resource base is sufficient 4500 4000 3500 3000 bn barrels 2500 2000 1500 USGS estimates for oil resources 1000 500 Cumulative production 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
30.5 30 29.5 29 Call on OPEC crude OPEC crude production OPEC crude oil supply has risen 4.5 mb/d since 2002 28.5 mb/d 28 27.5 27 26.5 26 25.5 25 2003 2004 2005
40 38 36 call on OPEC crude OPEC capacity expansions up to 2010 should lead to growing spare capacity OPEC capacity (end year) 34 32 mb/d 30 28 26 24 22 20 2006 2007 2008 2009 2010
But the downstream is also critical Supply security relevant along entire supply chain Inadequate investment in refining capacity an important factor behind recent price movements Increasingly stringent product specifications OPEC NOCs are undertaking part of the investments needed in the downstream But the major responsibility lies with the consuming countries and international oil companies
OPEC s Long-Term Strategy underlines uncertain oil demand growth 115 110 105 100 mb/d 95 90 85 80 75 70 2000 2005 2010 2015 2020
900 Vehicle ownership per 1000 inhabitants in 2003 USA: 826 800 700 more than 50% of the countries in the World have fewer than 100 vehicles per 1000 Most West European countries have 400-600 Japan: 581 600 500 CIS and central European countries tend to be 200-400 400 300 200 100 Most countries below 10 are in Africa South Asia: 11 or lower China: 15 Latin America, S. E. Asia and Middle East: typically 50-200 Probably >40% below 50 0
Poverty eradication Over 1 billion people live on less than $1 per day Millennium Development Goal number 1: poverty eradication Access to modern energy services must be improved upon Eradicating poverty close to heart of OPEC MCs Developed countries have commitments to fulfil, such as capacity building, technology transfer and financial resources
Other sources of uncertainty Technological developments and diffusion especially in transportation sector Efficiency improvements in conventional engines The possible growth of hybrid vehicles Uncertain effects of changes in demographic structure Consuming country policies - energy policy discriminates against oil Environmental policy Adds to uncertainty over oil demand growth Need for cleaner fossil fuel technology
Energy security and protection of the environment Climate change: OPEC welcomes entry into force of Kyoto Protocol Provisions to minimise negative economic impacts of policies and measures on fossil fuel exporters embedded in the UNFCCC Annex-I countries should give concrete realisation to these commitments Carbon capture and storage (CCS) is a promising technology Need for large-scale CCS demonstration projects
500 450 400 350 Cumulative investment needs in OPEC: 3 scenarios Uncertain future demand translates into a broad range of possible OPEC investment needs $(2005) billion 300 250 200 150 100 50 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Dialogue and co-operation OPEC continues to engage in dialogue and co-operation Later this month, 10th International Energy Forum (IEF), Doha, Qatar, is an important meeting IEF Secretariat opened in Riyadh, Saudi Arabia OPEC a leading participant in the Joint Oil Data Initiative Need for better data on demand and stocks OPEC sees dialogue and co-operation among all parties as the way forward with regard to security of supply and demand
Security of demand: a real issue Security of demand and security of supply are mutually supportive Security of demand is a legitimate concern of producers Uncertainty over future demand translates into a broad range of potential levels of demand for OPEC oil Investment requirements are large, subject to long leadtimes and pay-back periods More transparency in evolution and implementation of policies is key Improved data availability and quality needed for demand and stocks, as well as other demand variables
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