chatham house 2016 sg speech slides (1)
TRANSCRIPT
Energy Markets, Political Developments and Security Challenges
Opening Address: Oil Market Outlook
MENA Energy 2016, Power, Security and Energy MarketsLondon, 25th January 2016
Abdalla Salem El-BadriOPEC Secretary General
© 2016 Organization of the Petroleum Exporting Countries
The current oil market environment
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• The market is currently going through a significant readjustment, since July 2014:• prices have fallen by around 70%• many investments have been deferred and some cancelled• manpower has been laid off• supply has been greater than demand• stocks have risen above their five-year average
• The market has been searching for balance:• how did the current situation evolve?• how can it be resolved?
© 2016 Organization of the Petroleum Exporting Countries
World oil supply growth, 2008-2014y-o-y change, mb/d
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From 2008 to 2014, non-OPEC supply grew by 6.29 mb/d, while OPEC production decreased by 0.31 mb/d
-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0
OthersUK
MexicoNorway
SyrianSudansYemen
ColombiaChinaBrazil
RussiaCanada
US
OPECNon-OPEC supply
2008
2009
2010
2011
2012
2013
2014
2008-2014
-0.31 mb/d6.29 mb/d
© 2016 Organization of the Petroleum Exporting Countries
-0.5 0.0 0.5 1.0 1.5
OthersMexicoYemen
AustraliaKazakhstan
DenmarkBahrainCanada
ChinaUK
RussiaBrazil
US
OPECNon-OPEC supply
2015
World oil supply growth, 2015 y-o-y change, mb/d
1.07 mb/d1.24 mb/d
4
Non OPEC supply in 2015 rose by 1.24 mb/d, compared to year earlier, while OPEC production increased by 1.07 mb/d
© 2016 Organization of the Petroleum Exporting Countries
OECD commercial stocks vs. crude oil pricesExcessive stock surplus strongly impacts crude prices
5
-150
-100
-50
0
50
100
150
200
250
300
0
20
40
60
80
100
120
140
Brent (LHS) Difference to five-year average (RHS)
mbUS$/b
© 2016 Organization of the Petroleum Exporting Countries
Long-term oil demand outlookMajor investments needed
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• Oil demand increases by around 17 mb/d between now and 2040
• Oil-related investment requirements are estimated to be around $10 trillion over this period
• At current price levels, not all of the necessary future investment is viable
• Extreme prices – either too high or too low – are not in the interests of either producers or consumers
Global oil demand outlook
© 2016 Organization of the Petroleum Exporting Countries
The environment and climate change
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• We welcome the ‘Paris Agreement’ to reduce climate change
• We need to be practical, realistic and equitable
• We need to continue to develop renewables, but they cannot be seen as a replacement for fossil fuels in the coming decades
• We need to continue to use energy more efficiently, but we need to remember that some people still have no access to modern energy services
• There are environmental concerns regarding fossil fuels, but there are ways that these can be met and overcome
© 2016 Organization of the Petroleum Exporting Countries
A sustainable energy future for all
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• The best way forward is for all industry stakeholders to continually work towards achieving more balance for our industry in the short and long-term
• This will help us deliver a sustainable energy future; for all producers and for all consumers too
• Market forces, as well as cooperation among producers, will eventually lead to the return of stability/balance
• I remain optimistic about the industry’s future
www.opec.org
Thank you