What do you see as the most important instruments for confronting the problem of petroleum scarcity?
I think I should state up front that there are more than enough resources to meet demand growth for the foreseeable future. When people talk about peak oil, we do not see it happening any time soon. Recent estimates from the US Geological Survey of ultimately-recoverable resources are 3,500 billion barrels. To put this into some context, cumulative oil production has been less than a
third of this.
The two central elements in helping to continually increase and develop petroleum resources are technology and manpower – just as they have been in the past. Human ingenuity has been, and will continue to be, the driving force behind technological innovations. And technology will remain the key to unlocking difficult-to-access resources, transforming the supply geography and reducing costs.
What is the significance of extracting difficult-to-access deposits in light of the depletion of traditional reserves?
Today, the oil industry continues to extend its reach in exploring for oil and developing resources in new frontier areas, which are often found in remoter, harsher and deeper locations. Again, this is nothing new. The industry has continually pushed the limits of what is possible throughout its history. In some regions it is certainly true that easier to access resources are being depleted, but this is not true for all.
For example, there are many OPEC Member Countries with plenty of traditional resources remaining. Overall, OPEC currently holds over 80% of the world’s proven crude oil resources. In looking to the future, all sources of oil supply will be important to meeting demand. And, given the history of the industry, I am sure we will continue to see more exploration and production from
harder-to-access resources.
What contribution can OPEC make to ensure the security of transportation routes?
We recognize the importance of maintaining accessible transportation routes, particularly given the global nature of the industry. It is essential to have security and stability to allow oil and related products to flow freely to all corners of the world. From OPEC’s perspective, however, as an inter-governmental organization focusing on research and the business of the oil industry, this is not an area that we are directly involved in. No single organization, institution or country can do this alone – this is the responsibility of the entire world.
How can OPEC make oil supplies more independent from political events in individual member states such as the collapse in Libya or sanctions against Iran?
Again, this is a topic that the OPEC Secretariat cannot comment on directly. It is an issue for the countries involved. What I can say, in regard to last year’s uprising in Libya, is that other OPEC Member Countries were able to step in to help meet demand when the country’s production was almost completely shut-in.
And, since September last year, Libya has done an excellent job in bringing its production back on stream. At the end of last year, Libyan crude was over 1.0 million barrels a day, which was a remarkable turnaround after production began to be restored in September. And today, it is around pre-war levels of 1.6 million barrels a day. What this underlines is that consumer’s needs were met. There was no shortfall in supply.
As far as the sanctions against Iran are concerned, I hope that an amicable solution will be reached soon – that area has had more than its fair share of conflicts!
How strongly do producing countries that do not belong to OPEC endanger your organization’s pricing policy?
Let me stress that OPEC does not have a price target. We believe the oil price should be based on market supply and demand fundamentals. Our goal at OPEC is for market stability, which is essential for an efficiently functioning market. OPEC sees no threat whatsoever from non-OPEC producing countries – we have been living together with them since OPEC’s inception.
Is the growing percentage of natural gas in the global energy mix a risk to OPEC’s importance?
In OPEC, we recognize the expanding role of gas. In our most recent World Oil Outlook we anticipate that gas will increase its share of the energy mix from around 23% in 2010 to just over 25% in 2035. However, its overall share will still lag that of oil, which still contributes around 28.5% to the energy mix in 2035. So what does this mean for OPEC? We believe that oil will see significant expansion and remain central to the global energy mix. Thus, it will evidently remain central to Member Country economies. From the gas perspective, I should also point out that our Member Countries have significant gas reserves. Let me add that OPEC welcomes the efficient and sustainable development of all energy technologies.
When OPEC celebrates its 100th birthday in 2060, will petroleum be an unaffordable luxury?
There are times I wish I had a crystal ball! I think it is important to reflect on the fact that OPEC has onlyrecently celebrated its 50th anniversary. And there is evidently much that has changed in the industry, and the world, in this first 50years. Let me ask the question: how much could have been predicted? For example, who could have envisaged the super computers we now take for granted, in both the oil industry, and the world at large? Who could have foreseen the Internet revolution and the changes in the way we communicate? And who could have forecasted the aviation revolution, with flights for many around the world becoming the norm, rather than the exception?
My point is that 2060 is a long way off. It is not easy to make predictions this far in advance. All I can say is that OPEC will continue to look to ensure the stabilization of oil markets, in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry. This was our goal 50 years ago, is our goal today, and I am sure will be our goal 50 years hence.
The interview was conducted by Lucas Lypp, online editor.