Keynote Address by OPEC Secretary General

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the ADIPEC Opening Ceremony, Abu Dhabi, UAE, 7 November 2016.

Excellencies, ladies and gentlemen,
Good morning.

It is an honour to deliver a keynote address at the opening of the 2016 Abu Dhabi International Petroleum Exhibition and Conference under the Patronage of His Highness, Sheikh Khalifa Bin Zayed Al Nahyan, President of The United Arab Emirates.

It is also a pleasure to be on a panel of such high-level dignitaries – His Excellency, Dr Sultan Ahmed Al Jaber, UAE Minister of State and CEO of ADNOC; His Excellency, Suhail Mohamed Al Mazrouei, UAE Minister of Energy; and, Rex Tillerson, Chairman and CEO, Exxon Mobil.

I would like to thank everyone involved – the Government of the UAE, its Energy Ministry and ‘dmg events’ – for the invitation, all the excellent arrangements, as well as the hospitality we have received since arriving.

With a 31-year history, ADIPEC is today one of the premier global energy industry conferences and exhibitions, attracting more than 100,000 oil and gas industry professionals from 120 countries around the world.  It is a platform that allows industry stakeholders to come together to discuss viewpoints, share analysis, network, showcase technologically innovative solutions and provide a platform for bilateral trade.  At OPEC, we are extremely proud to see such an event taking place in a Member Country.

The importance of such an event cannot be over-estimated.  The oil and gas industry is one of the most vital global economic sectors, and it will continue to be in the years to come.  These products will remain vital in continuing to provide heat, light and mobility to billions.  We also need to remember that there remain billions of others that still have no access to modern energy services.  It is critical that this is rectified, and oil and gas can play a vital role in this regard.

In talking about sustainable development, I feel I should also make reference to the ratification of the Paris Agreement only a few days ago.  OPEC welcomes this agreement, and as I am here in the UAE I should like to highlight the fact that the UAE has already ratified it.

However, we should not forget that the Paris Agreement calls for 'equity' for all Parties.  Each country should be allowed to develop in a sustainable manner.  Therefore, it is vital to ensure that less-developed countries have equitable access to development opportunities.

Excellencies, ladies and gentlemen,

The importance of oil and gas to our future is underscored in OPEC’s 2016 World Oil Outlook, which will be launched tomorrow at ADIPEC.  This includes an online interactive version that enables users to download specific data and information that lies behind the analysis and commentary.

Later this morning we will also officially launch the first-ever Annual Statistical Bulletin Smart App, which is a joint development by IT experts from OPEC and the UAE Ministry of Energy.  This app will make the ASB’s content of international oil and gas data available instantaneously from any mobile device.  This is another prime example of OPEC’s support for data sharing and transparency.

Looking to the future, the 2016 World Oil Outlook sees global oil demand increasing from around 93 million barrels a day in 2015 to over 109 million barrels a day by 2040.  And from the perspective of natural gas, demand increases from close to 350 billion standard cubic feet a day in 2015 to 590 billion standard cubic feet a day in 2040.

In fact, oil and gas are still expected to contribute 53 per cent to the global energy mix by 2040.

Of course, all this will require huge investments with new barrels needed to not only increase production, but also to accommodate for decline rates from existing fields.  Estimated oil-related investment requirements are close to $10 trillion in the period to 2040.  And from the perspective of gas, the number is around $6 trillion.

Let me stress here that OPEC Members are committed to invest in existing and new production capacity.  They remain unswerving in their commitment to meeting the future requirements of consumers in a timely and sustainable manner.

At the global level, however, the situation that has evolved over the past two years or so is putting this future at risk given the dramatic drop off in investments.  Global oil and gas exploration and production spending fell by around 26 per cent in 2015 and a further 22 per cent drop is anticipated this year.  Combined, this equates to above $300 billion.

If market and financial conditions do not improve, there is the distinct possibility that we could see a third year of investment cutbacks.  To put this into some oil industry context, there has never been a consecutive three-year decline in its history.

This is a major concern for an industry that needs regular and predictable investments to provide the necessary supply in the medium- and longer terms.

It is why we at OPEC have been undertaking intensive consultations over the past few months about how best to return stability to the market.

From the perspective of OPEC, this led to the landmark ‘Algiers Accord’ at the 170th (Extraordinary) Meeting of the OPEC Conference at the end of September.  The agreement underlined the Organization’s continued commitment to a ‘sustainable stability’ in oil markets and was focused on accelerating the ongoing drawdown of the stock overhang and bringing the market rebalancing forward.

The ‘Algiers Accord’ also highlighted the importance of developing a framework of high-level consultations between OPEC and non-OPEC oil-producing countries.

This led to the formation of a High-Level Committee that convened in Vienna at the end of October, with a meeting between OPEC Members, and then a meeting between both OPEC and some non-OPEC nations.  These discussions were positive and have allowed us to better understand the viewpoints of all the various parties present.

Consultations among OPEC, as well as non-OPEC, will continue in the coming weeks, with another High-Level Committee meeting set for later this month.  We believe it is vital that OPEC and non-OPEC come together and take coordinated and timely action to rebalance the market, for the common good of all.  Our industry works best with collaboration, cooperation and consensus.

Excellencies, ladies and gentlemen,

As this event highlights, there are many reasons why we should be optimistic about the industry’s future.  It is clear that oil and gas will continue to be fuels of choice.  And I have no doubt that through innovation, human ingenuity and technology, the industry will be able to continually transform itself to overcome the challenges it faces, and unlock the many opportunities before it in the years ahead.

Of course, the current oil market is a challenging environment.  However, as I have been witness to over the past couple of months, and I am sure will be readily apparent here at ADIPEC, the best way forward is for all industry stakeholders to continually dialogue and work towards achieving more stability for our industry.

This is not only in the short-term, but in the long-term as well.  This will help us deliver a sustainable energy future; for all producers and for all consumers too.

Thank you.

HE Barkindo, OPEC Secretary General delivers his Keynote Address at ADIPEC

HE Barkindo, OPEC Secretary General delivers his Keynote Address at ADIPEC

HE Barkindo during the Opening Ceremony

HE Barkindo during the Opening Ceremony

ADIPEC attracts more than 100,000 oil and gas industry professionals from 120 countries around the world

ADIPEC attracts more than 100,000 oil and gas industry professionals from 120 countries around the world