Opening remarks by OPEC Secretary General at the 3rd High-level Meeting of the OPEC-India Energy Dialogue

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the 3^rd High-level Meeting of the OPEC-India Energy Dialogue, 17 October 2018, New Delhi, India.

Your Excellency, Ladies and Gentlemen,

Namaskar!

It is a great pleasure to return to New Delhi and participate in this Third High Level Meeting of the OPEC-India Energy Dialogue.

To my dear friend, His Excellency, the Honourable Dharmendra Pradhan, Minister of Petroleum and Natural Gas and Skill Development and Entrepreneurship, and all of his team, you have demonstrated once more the world-renowned Indian hospitality and we are very grateful - bahoot dhanyavad!

I am extremely fortunate, as this is my fourth mission to India since I assumed the position of OPEC Secretary General in August 2016. When I was here in April, I was delighted to visit the Digboi Refinery, Assam State, which represented the fulfilment of a lifetime wish.

The uniqueness of this great nation’s culture, the immense contribution of Indian civilization in shaping our world, means that it is a profound honour for any visitor to enjoy this land.

My only slight regret is that I could not stay to celebrate the great festival of Diwali here in a few weeks’ time!  And although it is a little early, please permit me, on behalf of OPEC, to take the opportunity to wish all of you, your families and all your loved ones, a Happy Diwali and Saal Mubarak.

In addition to my work-trips to this great land, the Honourable Minister and I meet regularly, in a range of other forums, which take place throughout the world.  OPEC was honoured that the Minister addressed the 7^th International OPEC Seminar on 21 June 2018 and enriched our event immeasurably through his insightful remarks.

There are many factors which explain the frequency of these interactions between OPEC and India. It indicates the fact that as one very famous visitor to India put it, “It’s no exaggeration to say our Information Age is rooted in Indian innovations—including the number zero.” (Barack Obama) Furthermore, it reflects the initiative and visionary leadership of the Honourable Minister, who tirelessly works to ensure India positively influences international dialogue in the sphere of energy.

However, most fundamentally of all, India is an extremely important partner for OPEC, and all of us in the Organization are determined to continue strengthening this relationship both at a technical and high-level.

Since 2000, trade between India and OPEC has grown substantially. India’s overall imports from OPEC Member Countries increased from just over $4 billion to a high of above $170 billion in 2012, before dropping slightly in recent years. Total imports from OPEC Member Countries stood at $105 billion in 2017, up 25% year-on-year. And in the other direction, OPEC’s total imports from India increased from just under $4 billion in 2000 to over $60 billion in 2014. Moreover, OPEC Member Countries imports from India amounted to $44 billion in 2017.

In terms of crude oil, India’s total imports have risen from around 1.5 mb/d in 2000 to close to 4.3 mb/d in 2017.  And approximately 83% of this came from OPEC Member Countries.  In fact, in 2017 India was the third fastest oil demand growing nation globally, with an increase of close to 140,000 b/d, or 3.3%.

And this is not just a short or medium term trend. One of the central themes of OPEC’s flagship publication, the World Oil Outlook, the most recent version of which was launched in Algiers in September, also rolled-out yesterday in New Delhi, at the 2^nd India Energy Forum, is the significant impact of India’s economic development on the energy industry.

We estimate that India’s economy will grow at an average annual rate of 6.5% for the period 2017-2040.

From the perspective of oil, demand growth will increasingly shift to India.  By 2040, India’s oil demand is anticipated to increase by over 120%, from around 4.7 mb/d to 10.4 mb/d.  Its total share of global oil demand will rise from almost 5%, to more than 9% by 2040.

India is therefore projected to have the fastest average oil demand growth (3.7% p.a.) in the period 2017-2040, as well as the largest additional demand.

To meet this increase in demand, both from India and elsewhere, the required global oil sector investment is estimated at $11 trillion. As I emphasized in my remarks at the India Energy Forum, this underscores the absolutely necessity of having a sustainable and stable oil market, conducive to encouraging the type of long-cycle investments necessary to meet future demand.

This trajectory made the last downturn in our oil industry, from 2014-2016, particularly concerning. At a time when we needed a strong investment climate in the industry, instead we saw one trillion dollars in investments being frozen or discontinued. Exploration and production spending fell by an enormous 25% in both 2015 and 2016.

Things needed to change, and as Mahatma Ghandi said, “be the change that you wish to see in the world.”

This has led to what is termed the ‘Declaration of Cooperation’ process, whereby OPEC and its non-OPEC partners, work in a concerted manner to contribute to market stabilization efforts. The media tend to focus on the voluntary production adjustment component of this; however, there are a range of means by which the partners seek to work together in the interests of producers and consumers.

The impact of the ‘Declaration of Cooperation’ has exceeded all expectations. The partnership has evolved from a noble vision to a transformative force-for-good, a permanent feature of our energy landscape. The OECD commercial stock overhang above the five-year-average has been reduced by more than 370 mb, and switched to a deficit of around 32 mb in September 2018.

Despite the progress achieved to date, there remain many non-fundamental factors which influence the global oil industry and are beyond the control of any one stakeholder. These include geopolitics, natural disasters and other critical uncertainties. This has been very apparent in recent months.

Nevertheless, at the most recent meeting of the OPEC and non-OPEC Joint Ministerial Monitoring Committee (JMMC), which met in Algiers, Algeria, on 23 September 2018, participating countries, while acknowledging growing uncertainties surrounding market fundamentals, including the economy, demand and supply, reaffirmed their focus on seeking a balanced and sustainably stable global oil market, serving the interests of consumers, producers, the industry and the global economy at large.  The Committee also urged countries with spare capacity to work with customers to meet their demand during the remainder of 2018.

Your Excellency, Ladies and gentlemen,

Prime Minister Modi once said, “The power and energy sectors are the biggest constituents of the infrastructure sector. If you ignore them, no development will happen.”

We share these views, for we believe that our industry can make a major contribution to sustainable development. We should not forget that today around 3 billion people worldwide do not have clean fuels for cooking, and around 1 billion people have no access to electricity. And we are very cognizant of India’s ongoing commitment to tackle the scourge of energy poverty.

OPEC is committed to harnessing oil as a means of eradicating energy poverty in a sustainable manner. This can be achieved through collectively developing and adopting technologies, as well as all-inclusive energy policies, that transform the environmental credentials of all energies. This corresponds with the sub-target of Sustainable Development Goal 7 which aims “to enhance international cooperation to facilitate access to clean energy research and technology, including cleaner fossil-fuel technology.”

Your Excellency, Ladies and Gentlemen,

As an intergovernmental organization, a collaborative approach to problem-solving and an emphasis on international dialogue on the basis of mutual respect are tenets integral to OPEC. It heartens us that India shares such commitment, for as Prime Minister Modi, so eloquently put it: “I believe mutual respect for one another and cooperation should be the basis for relationships with foreign nations.”

The challenges we face today are different to what they were just two years ago. However, there is no substitute to international dialogue and working together as the most effective means of acting in the best interests of consumers, producers and the global economy.

Once again, I thank you for endorsing, sustaining, enriching, and expanding this dialogue, as well as for your hospitality and Jai Hind!