Remarks by OPEC Secretary General at the 3rd India Energy Forum by CERAWeek

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the 3^rd India Energy Forum by CERAWeek, Topic: Impact of Global Oil Markets on India, 15 October 2019, Taj Palace, New Delhi.

Excellencies,
Ladies and gentlemen,

Good morning.

It is a great pleasure to be back in India and to participate in the 3^rd India Energy Forum by CERAWeek.

I have had the great fortune to attend each year, and wish to applaud IHS Markit, along with the Ministry of Petroleum and Natural Gas, for making this event so compelling and successful.

It is a privilege for me to once again share the floor with Dan Yergin, one of the world’s foremost energy icons and a wonderful friend of OPEC.

And I would like to thank our extraordinary host, the Honourable Dharmendra Pradhan, Minister of Petroleum and Natural Gas and Minister of Steel. It was a pleasure to spend time recently with Minister Pradhan and Dan at the World Energy Congress in Abu Dhabi.

I have had the good fortune to work closely with Minister Pradhan through our OPEC-India Energy Dialogues, which began in 2015 and have become more valuable with each passing year. The next high-level energy dialogue is in December this year.

India’s enthusiasm for producer and consumer dialogue has contributed enormously to our success in restoring sustainable stability to the world oil market.

India imports around 80% of its oil from OPEC and our Member Countries are forging ever-closer investment ties with India.

In this respect, our dialogues provide a deeper understanding of India’s needs. Furthermore, our expanding technical consultations contribute to ensuring a secure and stable energy future.

Minister Pradhan tweeted about the value of these ever-closer bonds following our meeting on the sidelines of the World Energy Congress:

“OPEC is an important energy partner for India. We explored ways to further enhance collaboration between India and OPEC and work together to address the issues of energy poverty and energy security.”

Ladies and gentlemen,

Our topic this morning is the ‘Impact of Global Oil Markets on India’. If I may, I will take a moment to talk about the impact of India on the global oil market before turning to the global market more broadly.

It should come as no surprise to anyone who has visited this dynamic country that India is one of the major drivers of global economic and oil demand growth. The country’s GDP is projected to grow by 6.1% in 2019 and 6.7% in 2020, making it one of the world’s fastest growing economies.

Our latest figures for India show that oil demand increased in August by 0.12 mb/d for the second month running with total consumption of 4.61 mb/d. The country’s oil demand growth in 2019 is estimated at 0.14 mb/d y-o-y, accounting for 15% of global oil demand growth.

Looking further down the road, let me cite a few figures from OPEC’s flagship publication, the World Oil Outlook. The newest edition will be released on 5 November, offering even more updated insights:

• Global primary energy demand will increase by 33%, or 91 mboe/d, between 2015 and 2040. India will account for a significant 24% of this anticipated increase, or 22 mboe/d.
   
• World oil demand is expected to increase by 14.5 mb/d, increasing from 97.2 mb/d in 2017 to nearly 112 mb/d in 2040. India will account for oil demand growth of 5.8 mb/d, which represents an astonishing 40% of the overall increase. India is projected to see the largest additional oil demand and the fastest growth (3.7% per annum) in the period to 2040.
   
• Furthermore, India’s economy is forecast to grow at an average annual rate of 6.5% for the period 2017-2040. Real GDP is expected to surpass OECD Europe by 2035, and by 2040, it is anticipated to even surpass OECD America.

Ladies and gentlemen,

Energy security goes to the core of OPEC’s being.

We have demonstrated repeatedly our commitment to sustainable stability, even during unprecedented events like the attacks on Saudi Arabia’s oil facilities one month ago.

In the immediate aftermath of these shocking attacks, Saudi Arabia moved swiftly to ensure a stable supply to the global market as it worked to restore its production capacity. Its exemplary handling of the situation very quickly stabilized markets and allayed concerns about supply disruptions.

Additionally, the oil industry is in a much stronger position today to deliver a sustainable energy supply than it was just three years ago.

This turnaround is thanks largely to the efforts undertaken by OPEC Member Countries and 10 non-OPEC oil producing countries, who came together in the ‘Declaration of Cooperation’ to reverse the 2014-2016 industry crisis.

Since 2016, the production adjustments undertaken by the ‘Declaration of Cooperation’ partners have brought durable stability to the global oil market, restored investor confidence, and benefited producers and consumers.

Furthermore, these market-balancing measures continue to provide crucial support to the world economy.

Building on these impressive results, the ‘Declaration of Cooperation’ partners have endorsed a voluntary ‘Charter of Cooperation’. As a matter of fact, Saudi Arabia and the Russian Federation further underscored their commitment to the ‘Charter’ at a ceremony held this week in Riyadh. The ‘Charter’ takes a crucial step beyond the ‘Declaration’s’ important focus on supply adjustments.

What does this mean for an important oil-consuming nation like India?

First, the ‘Charter’ provides a durable foundation for the opportunity to facilitate dialogue; promote a better understanding of market fundaments; support energy sustainability; and promote technological advancement.

OPEC does not believe in one-way streets. Throughout the ‘Declaration’ process we’ve been diligent in listening to the views of India and other oil-consuming nations. The ‘Charter’ provides a further means to engage in a constructive and consultative process.

Secondly, the ‘Charter’ better positions us to address one of the greatest challenges our planet faces.

That challenge is climate change.

With its vast coastline and growing population, India knows all too well the risks if we don’t act.

I was extremely impressed by HE Prime Minister Narendra Modi’s remarks to the UN Climate Action Summit last month in New York. The Prime Minister highlighted India’s visionary plans for the energy transition and used the example of public-private partnerships to drive innovative solutions.

India’s colossal success in expanding access to energy is further testament to the country’s socioeconomic progress and commitment to sustainable development.

At OPEC, we also are engaged in and supportive of collective efforts – including the Paris Agreement and the ongoing UN climate discussions – to address the climate change challenge.

Looking ahead, we believe the most effective approach to mitigating the effects of climate change is through deeper cooperation and public policies that encourage a sustainable energy mix where oil is a fuel of choice.

Related to this, the oil industry will continue to need a supportive investment climate if we are to meet the world’s energy expanding needs while also delivering climate solutions.

However, factors that dampen investment in the oil sector include extremes in market volatility, geopolitical interference, and more recently the discriminatory nature of policies against oil and gas.

Those of you who have read Dan Yergin’s extraordinary books know that the oil industry has historically been a leader in developing and deploying technologies that deliver progressive improvements in efficiency, exploration and delivery. These advances, in turn, ensure a secure and stable supply of energy in the interests of oil-producing and consuming countries, and the global economy at large.

Thank you for listening. I look forward to continuing our discussion.