Opec secretary-general Abdalla Salem El-Badri delivering ‘The 2014 Abdullah bin Hamad al-Attiyah International Energy Awards lecture’ at the Museum of Islamic Art on Tuesday night.
By Pratap John/Chief Business Reporter
Natural gas will have a greater share in meeting global energy demand at 26% by 2035 compared with 22% in 2010, says Opec secretary-general Abdalla Salem El-Badri.
“The global energy demand is set to grow”, El-Badri said, while delivering ‘The 2014 Abdullah bin Hamad al-Attiyah International Energy Awards lecture’ at the Museum of Islamic Art on Tuesday night.
In Opec’s 2013 World Oil Outlook, world energy demand rises by 52% over the 2010 — 2035 period.
Renewables, from wind, solar, small hydro and geothermal, are expected to grow at more than 7% a year, often as a result of government support and incentives. They certainly hold promise; but globally their share of the energy mix will still be less than 3% by 2035, given their low initial base.
Both the share of biomass and nuclear remain at steady levels throughout the 2010-2035 period, at around 9% and 6% respectively, El-Badri said.
So, it is fossil fuels that will continue to play the dominant role in meeting demand, although their overall share will fall from 82% to 80%.
Throughout most of this period, oil will remain the energy source with the largest share, although its overall share declines from 33% to 27%.
Coal’s share remains relatively stable at around 27%.
“Focusing specifically on oil, our projections see demand increasing by around 20mn barrels a day during the period to 2035. And there will be a big shift in the balance between the OECD area and elsewhere, leading to a steady decline in demand in all OECD regions. It will be developing countries that drive demand, with developing Asia accounting for most of the global increase,” El-Badri said.
The Opec secretary-general highlighted an issue that many experts are talking about, which is the role of US tight oil in the industry’s future.
“There is no doubt that this is a welcome addition. It adds depth and diversity to the market. But questions remain as how sustainable this will be in the long-term. In Opec’s view, we see US tight oil, including NGLs, reaching 4.9mn barrels a day by 2018, before declining thereafter,” El-Badri said.
Earlier, El-Badri highly praised HE Abdullah bin Hamad al-Attiyah’s contributions to the global energy industry.
“My own personal acquaintance with HE al-Attiyah goes back many decades. His achievements over the years are ones to be extremely proud of. In Qatar, he has been a driving force behind the country’s transformation into one of the world’s major energy hubs.
“At Opec too, he has played a prominent role in helping the organisation through some difficult times. He has been able to use his charm and humour to bring people together. And he has been able to broker solutions, when there has been discord.
It is appropriate then, that the awards given tonight recognise the hard work of other people associated with the industry,” El-Badri said.
Mena region ‘strategically well-placed’ to supply world with energy
By Pratap John/Chief Business Reporter
Mena region is “strategically well-placed” to supply the world with energy, especially the ever-expanding Asian oil and gas demand centre, said Opec secretary-general Abdalla S El-Badri.
Over the years, the Mena region’s geographic position and its abundant natural resources have given it immense strategic importance. The region has been, and remains, central in keeping energy supplies moving to all corners of the world, he said, while delivering ‘The 2014 Abdullah bin Hamad al-Attiyah International Energy Awards lecture’ at the Museum of Islamic Art on Tuesday night.
“Clearly, the region is now perfectly-positioned for supplying this ever-expanding Asian oil and gas demand centre. And there is no doubt that the region has the resources to continue to play a major role in providing energy supplies, ensuring energy security and contributing to market stability for the foreseeable future,” he said.
The Mena region holds around 865bn barrels of proven crude oil reserves and 86tn m3 of proven gas reserves. This represents about 58% and 43% of the global totals, respectively. The majority of this is also to be found in Opec member countries.
In 2012, the region produced over 31mn barrels a day of liquids and over 750bn cubic metres of natural gas, with a significant part of this provided as export to the world.
“Looking ahead, Opec’s World Oil Outlook expects that crude and product exports from the Mena region will increase from just over 22mn barrels a day to close to 28mn barrels a day between 2012 and 2035. And, of course, as everyone here this evening knows, gas exports are expected to expand significantly too.
“Taking all this into account, it is clear that the energy market outlook is a favourable one. Demand is set to increase, resources are available, and the Mena region is strategically well-placed to supply the world with energy.
“However, as we all know, no-one can make precise predictions about the future. History tells us that things rarely stay the same, and the market and its stakeholders will have to evolve to ever-changing circumstances in the years ahead.”
El-Badri said there was no doubt that the future path for the industry would be marked with many challenges and uncertainties.
“One specific challenge — and the one that I have been asked to talk about — is geopolitics. We all know geopolitical events can have an impact on the oil market and raise questions about energy security. Some people might like to try to keep geopolitical issues out of the energy business. But they are often inseparable.
“Over the past few years we have seen many geopolitical events impact the oil market. These include the instability in Iraq, international sanctions on Iran, uprisings in Libya, Egypt and Tunisia, instability in parts of Nigeria, conflict in Syria, and unrest in other countries such as Yemen and Somalia.
“Many of these are still with us in 2014. Of course, in the past month, we witnessed unexpected developments between Russia and Ukraine”.
According to El-Badri, there have been “concerns” that this crisis could lead to interruptions of Russian oil and gas supplies to Europe. It has also raised some questions as to whether additional supplies could be sourced from the Mena region.
However, supplies from Russia have kept flowing. And Ukraine remains a key transit country.
“I hope this continues. It is essential to keep energy flowing — even if political tensions exist. Energy is a global commodity. It drives our industries and businesses; it transports our people and commercial goods; and it is essential to everything we do.”
He said the oil market also needs to be able to have a degree of flexibility through spare capacity and stocks to help manage the impact of such challenges.
“We need to work together and provide the market with some direction — and, hopefully, a certain degree of stability. And in this, Opec continues to play a vital role,” El-Badri said.
He also spoke about many other uncertainties for the market to factor in and accommodate. Among these is the health of global economy, which is vital to the world’s energy future.
“The global economic situation currently offers up a mixed picture. We continue to see an ongoing recovery in the OECD. But recent events in Ukraine, as well as a slight slowdown in a number of emerging economies, present challenges.
“Other uncertainties are broad and varied. They include the potential impact of UN climate change negotiations; the role of financial markets and oil market speculation; some consuming country energy policies; a shortage of human capital; advances in technology; rising costs; and severe weather.
“At present, we see the oil market as well-balanced. Yes, there are challenges. But we feel these are currently being absorbed by the market. Supply is meeting demand, and prices have been stable.
“Nonetheless, we need to remain vigilant. In an industry where upstream projects are capital-intensive and long-term in nature, we need to recognise that any uncertainties can put investments in oil exploration and production projects at risk — which, in turn, can threaten future supply.”
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