Opening address to the 167th Meeting of the OPEC Conference

No 2/2015
Vienna, Austria
05 Jun 2015

by HE Dr. Mohammed Bin Saleh Al-Sada, Qatar's Minister of Energy and Industry and Alternate President of the OPEC Conference

Excellencies, ladies and gentlemen,

Let me begin by welcoming you all to Vienna for the 167th Meeting of the OPEC Conference.

I would like to extend special welcomes to His Excellency Dr. Salah Khebri, Algeria’s Minister of Energy, and His Excellency Mr. Asdrúbal Chávez, the People’s Minister of Petroleum and Mining of Venezuela, who are attending a Meeting of the OPEC Conference for the first time as Heads of their country’s respective Delegations.

On behalf of all the Heads of Delegation and the OPEC Secretariat, I would also like to thank their predecessors in office – His Excellency Mr. Rafael Ramirez of Venezuela and His Excellency Dr. Youcef Yousfi from Algeria.  Both provided dedicated and loyal service to their countries, as well as valuable contributions to the work of the Organization.  We wish them every success in their future endeavours.

In addition, I would also like to extend a warm welcome to Dr. Jamila Shu’ara, Permanent Secretary at Nigeria’s Ministry of Special Duties and Inter-Governmental Affairs, who has been appointed as her country’s Head of Delegation for this Conference.

Excellencies, ladies and gentlemen,

Since the last Meeting of the Conference in late November of last year, we have witnessed much volatility in the global oil industry.

Prices fell from around $77 per barrel at the time of the Meeting to around $45 by mid-January, although they have recovered since.
 
It should be stressed that we do not believe that actual market fundamentals warranted the almost 60 per cent fall in prices that the market witnessed between June 2014 and January 2015.  It is evident that speculators played some role in this fall.

The market has continued to see oversupply, and additionally, crude stocks have witnessed a significant build.  US commercial crude oil stocks in April 2015 were 24 per cent higher than the same time last year, although they have fallen back a little in recent weeks.
 
As a result of the downward price trend, a number of projects have been cancelled or put on hold, and investment plans have been revised.  Rig counts have fallen dramatically, and many industry workers have been laid off.

The current environment is clearly challenging – and has become a test for both oil producers and hydrocarbon investors.
 
At OPEC, we continue to monitor the situation, and are looking at ways and means to address the challenges ahead.  And for 2015, we are focused on how we see the market evolving – particularly over the second half of the year.

The global economic environment shows some encouraging signs, although the outlook is patchy.  Global growth for 2015 is forecast at 3.3 per cent, the same level as in 2014.
 
World oil demand in 2015 is forecast to grow by around 1.2 million barrels per day, higher than the figure of 1 million barrels per day in 2014.  The majority of this net oil demand growth will continue to be seen in non-OECD countries.

In terms of oil supply, non-OPEC countries will see much lower levels of production growth in 2015 than in previous years.  In fact, expected non-OPEC supply growth this year is just below 700,000 barrels per day, which is only around one-third of the growth witnessed in 2014.  In North America, US tight oil and Canadian oil sands are anticipated to see lower growth following recent strong declines in rig counts.

All this points to a more balanced market in the second half of 2015, with current estimates for OPEC crude demand at 30.3 million barrels per day in the third quarter, and 30.7 million barrels per day in the fourth quarter.

Of course, stability will be of paramount importance for the industry in the years ahead, given the need for investments in capacity expansion to make sure the world has enough supply to meet expected future demand.

Excellencies, ladies and gentlemen,

At today’s meeting, OPEC will discuss developments that have taken place over the last six months, and consider the market outlook for the remainder of 2015.

As always, OPEC’s focus will be on enhancing market stability in the interests of all parties and in support of steady global economic growth.  However, we should remember that this is not the responsibility of OPEC alone.  If we all wish to benefit from a more orderly oil market, then we should all be prepared to contribute to its stability.  In support of this, dialogue and cooperation are essential.
 
It has been encouraging to see more of this take place among OPEC and non-OPEC countries in 2015.  This includes a technical meeting between OPEC and non-OPEC countries that took place at the OPEC Secretariat last month.
 
These developments can only be beneficial.  We at OPEC are always willing to talk to other energy stakeholders.  And we hope these recent advancements continue.

OPEC also remains committed to participating in other international dialogue and cooperation efforts, and engaging further with other stakeholders.
 
It is essential for everyone to seek to enhance cooperation efforts in the interest of attaining and ensuring stability in the oil market.  This will help us all to better deal with the change and uncertainty that cyclical events in our industry bring.  And it will also help us to facilitate and support the development of some of the vast project opportunities that we can expect from the industry in the years and decades ahead.

Thank you for your attention.