OPEC Conference approves new Long-Term Strategy

No 9/2010
Vienna, Austria
14 Oct 2010

OPEC has adopted a new and comprehensive Long-Term Strategy (LTS) at its Ministerial Conference that ended in Vienna today (14 October). The LTS, which has been prepared over the past year, provides a clear and consistent framework for the Organization's future.

The development of the new LTS was entrusted to Member Countries' Deputy Ministers of Petroleum/Energy through a series of high-level meetings. These were held under the Chairmanship of HRH Prince Abdulaziz Bin Salman Bin Abdulaziz Al-Saud, Assistant Minister of Petroleum Affairs, Kingdom of Saudi Arabia, the Alternate Chairmanship of HE Dr. Bernard Mommer, OPEC Governor for the Bolivarian Republic of Venezuela and with the participation of HE Abdalla Salem El-Badri, Secretary General of OPEC. Technical support was provided by the OPEC Secretariat.

It is the second LTS approved by the Organization, following the adoption of the first at the 137th Meeting of the OPEC Conference in September 2005. This year's LTS also coincides with the 50th Anniversary of the establishment of OPEC.

The new LTS is timely, given the major upheavals the world and the oil market have faced in recent years. The onset of the global financial crisis in 2008 and the ensuing economic recession, which was the deepest and most widespread in more than six decades, have clearly had, and continue to have significant structural impacts upon the oil market. World demand for oil has declined in two successive years; a situation unseen since the early 1980s.

Moreover, prices have witnessed a rollercoaster ride, particularly towards the end of 2007, throughout 2008 and early 2009. Oil has increasingly emerged as an asset class, with excessive speculation adding appreciably to market volatility. There are significant changes under way in terms of financial regulations. Some regions have witnessed an expansion in non-crude fuels. And the ambiguity of a number of energy and environmental policies, often with evidently over-ambitious targets, particularly in developed regions, has led to uncertainty in regards to future oil demand requirements.

The LTS defines overall objectives, identifies the key challenges that the Organization faces now and in the future, and explores a number of coherent and consistent scenarios that depict plausible and contrasting futures of the energy scene. It is designed to be robust and adaptive throughout these various possible futures and will undergo 'wind tunnel' testing over the next five years to identify implementation gaps and ensure it continues to remain effective and efficient.

As with the first LTS, the strategy sets objectives in relation to the long-term petroleum revenues of Member Countries; fair and stable prices; the role of oil in meeting future energy demand and the share of OPEC in world oil supply; the stability of the world oil market, the security of regular supply to consumers, and the security of world oil demand; and in seeking to secure and enhance the collective interests of Member Countries in global negotiations and future multilateral agreements.

The strategy establishes the key issues that may constitute constraints for OPEC or help in the attainment of the objectives. These include global economic developments; oil as an asset class; oil prices; energy and environmental policies; technological developments; non-OPEC supply; and investments in the face of supply and demand uncertainties.

Overall, the LTS builds upon the 50 years of OPEC's experience in the global oil market. It will be instrumental for OPEC in its goal to help fuel world prosperity and contribute to market stability for the benefit of all, while safeguarding the legitimate interests of its Member Countries.

Some of the results and recommendations from the strategy will be made more widely available later this year with the publication of a summary of the LTS. This will be released on the occasion of the 158th (Extraordinary) Meeting of the OPEC Conference, in Quito, Ecuador in December.