How OPEC will sustain DoC – Barkindo
… global oil demand to surpass 111 million barrels a day by 2040
… world to attain 100 million barrels a day level of consumption much sooner than projected
Secretary-General of the Organisation of the Petroleum Exporting Countries, Mohammad Barkindo, has provided an explanation to market yearnings on how the orgnaisation intends to sustain the Declaration of Cooperation, DoC voluntarily entered into by 24 countries late 2016.
In his keynote address titled ‘Oil market perspectives beyond the short term’ delivered at the 25th International Caspian Oil and Gas Exhibition and Conference, 30 May 2018, Baku, Azerbaijan, obtained by SweetcrudeReports, the OPEC chief described future of the DoC as the “next critical phase” in the whole process.
According to him, success at handling the next phase will lead to market rebalancing, a gradual recovery in investments and the return of confidence in the industry.
Going forward, he said such will be achieved through a broader and institutionalised framework of cooperation based on the Declaration’s core principles of equity, fairness, and transparency.
“ …we will look into developing metrics and designing mechanisms to help govern against future shocks and extreme volatility in the market”, he added.
As the implementation phase continues to advance, Barkindo said OPEC and its partners will take stock of the successes accomplished so far, as it steps back and considers the larger picture and the perspectives over the medium to long-term.
“One of the greatest and most pressing challenges before us is ensuring that there will be adequate levels of investment in a predictable fashion to meet the world’s future requirements”.
Barkindo said although investment had gradually picked up in 2018 however, the industry is not seeing enough robust investment in long-cycle projects, which he described as the “baseload” of future supply, and the foundation of the industry’s future.
In the period to 2040, the required global oil sector investment is estimated at $10.5 trillion to meet future world oil demand that is expected to surpass 111 million barrels a day by 2040.
This represents a staggering increase of 16 million barrels a day.
“Indeed, the world will attain the 100 million barrels a day level of consumption much sooner than projected”.
“This is a clarion wake-up call that every effort should be made to avoid a potential supply gap that could present a serious challenge to the industry in the medium to long-term”.
This he said, will be essential, not only to maintain current production levels under given natural decline with compensation needs at 4% to 5%, but also to ensure a steady flow of oil to meet rapidly growing demand in the long term.
“It will also be a key foundation for future global economic expansion”, he added.
“I am convinced that the only way to meet these current and future challenges is through close cooperation and dialogue with like-minded partners”.
“With the Declaration of Cooperation, we have initiated a new era in international energy collaboration, the likes of which the world has never seen before. What is required is to build upon this model process. We must institutionalize it and expand it even further for a sustainable market stability beyond the short term”.
“Our collective efforts in last 16 months will go down in the history books of this great industry as the most courageous collective resolve by a broad coalition of OPEC and non-OPEC producers to rise together to address the challenge of restoring much-needed market stability on a sustainable basis. And there’s no better place to remind ourselves of that than here in Azerbaijan, where it all began almost 150 years ago as the cradle of our industry”.
“I would like to take this opportunity to invite the world’s global oil producers to join OPEC and its non-OPEC partners as we continue to work towards bringing about a lasting stability in the global oil market. All major stakeholders stand to benefit, including consumers, as together we pave the way for future economic growth and prosperity for current and future generations”.