Speech by OPEC Secretary General to the 21st World Petroleum Congress

Delivered by HE Abdalla S. El-Badri, OPEC Secretary General, at the 21st World Petroleum Congress, Plenary Session: 'Russian Petroleum Industry Perspectives', 16 June 2014, Moscow, Russia

Mr. Chairman, Excellencies, distinguished delegates, ladies and gentlemen,
Good afternoon.

On behalf of the Organization of the Petroleum Exporting Countries, it is a great honour to be here at the World Petroleum Congress in Moscow.

This global congress attracts speakers and delegates from all corners of the world.  It is an ideal platform to bring together NOCs, IOCs, service companies, international organizations, analysts and the media to discuss today’s most pressing energy issues. 

And our hosts, the Russian Federation, are a perfect choice for this event – a country with a long history of providing energy to the world.

Russia is a truly global energy power, with the largest combined oil and gas reserves, as well as the highest combined production of oil and gas.

It is currently the largest producer at 10.5 million barrels a day and is the second largest crude oil exporter, behind Saudi Arabia.  And on the natural gas side, it is the largest exporter, with close to 20 per cent of the world’s exports.  OPEC Member Country Qatar is the second largest.

I will not go into too much detail now about Russian energy, given that my fellow panelists are from the country’s three leading energy companies.  But there is potential for enhanced oil recovery in fields in Western Siberia and the Volga Urals, and through exploration and production in greenfields in Eastern Siberia and the Yamal Peninsula.

Of course, the future outlook is leading the country into new frontiers, with harder to access resources that require new technologies and significant investment.  There is no doubt that Russia has the resources to meet these challenges.

Russia is also ideally placed to serve as an energy hub, sitting between the markets of Europe and Asia, with the latter expected to be the largest energy demand centre by far in the years ahead.  The recent 30-year deal between Russia and China for Gazprom to deliver Russian gas to China is a clear sign that Asian demand will grow significantly in the coming decades.

Given all this, there is no doubt that Russia will be a central element to our global energy future.

It is a future where energy demand is expected to rise by 52 per cent by 2035.

Where natural gas and oil will still meet over 50 per cent of the world’s energy needs by 2035.

And one where the world needs to bring modern energy services to those currently living without them.  We need to remember that 2.7 billion people still rely on biomass for their basic needs, and 1.3 billion have no access to electricity.  Energy is a major enabler in spreading economic prosperity and growth.

Our global energy future is one in which none of us can act alone.  Any talk of ‘energy independence’ is just that.  We do not live in a world of independent energy nations.  Our future will increasingly be one of energy inter-dependence.

The interconnected and international nature of energy markets are tying us together as never before.  And with energy remaining central to each and every one of us, it is critical that all stakeholders work together for a secure, stable and sustainable energy future.

In this increasingly complex, challenging and ever-expanding energy system we need to recognize the importance of dialogue and cooperation – to help all stakeholders find common ground; to look for shared solutions; and to help bring about the market stability we all need.

Obviously, we will not find agreement on everything.  We do not live in a perfect world.  But at OPEC, we have long recognized the importance of adopting cooperative approaches when addressing major topical issues – involving dialogue with countries, international organizations, and other interested parties.  This applies to both direct oil industry matters, as well as other related areas such as environmental protection and sustainable development.

It is easy to appreciate where dialogue and cooperation among stakeholders can help meet some of the challenges that our industry will face in the years ahead.

These challenges are broad and varied.  They include developments in the global economic recovery; the potential impact of UN climate change negotiations; the role of financial markets and oil market speculation; consuming country energy policies; a shortage of human capital; advances in technology; and rising costs.

Here, it pleases me to talk about the healthy dialogue that exists between Russia and OPEC.  Our talks over the years have been wide-ranging, focusing on such issues as the state of the world energy market, its long-term prospects and associated challenges, the global refining situation, and tight oil and shale gas developments.

And of course, this relationship spreads to bilateral energy ties with many of our Member Countries.  For example, Russia’s Lukoil recently started oil production from the giant West Qurna-2 oil field in Iraq; Russian companies are involved in helping develop Venezuela’s Orinoco belt; and there are partnerships between Russian companies and a number of our other Member Countries.

I should also add here that OPEC engages in excellent and productive international dialogue and cooperation with various other parties.  This includes the European Union, the International Energy Agency, the International Energy Forum and the G-20.

Excellencies, ladies and gentlemen,

I am sure you will all agree that, as an industry, we need to focus on what we do best – providing energy to the world.  Russia is part of this.  OPEC is part of this.  NOCs and IOCs are part of this.  In fact, we are all part of this.

Our focus needs to be on maintaining market stability.  This was central to OPEC’s decision last week to maintain the Organization’s existing production levels of 30 million barrels a day.  This is what is required by the market.  We see a balanced and stable oil market today.

And looking at market indicators, we expect this to be the case for the rest of 2014.  There is steady demand growth and enough supply to meet demand, with both stocks and spare capacity at comfortable levels.

Stability is central to everything we do.  It is the concern that links us all.  And this is best achieved when all stakeholders better understand each other, through the enhancement of dialogue and cooperation.  I am sure this will be apparent over the coming week.

With that, I wish all those involved all the best for the next few days.

Thank you for your attention.