OPEC th International Seminar Petroleum: An Engine for Global Development 3–4 June 2015 Hofburg Palace Vienna, Austria Contact: 50 +44 7818 598178 www.opecseminar.org [email protected] Case for cooperation never stronger When OPEC’s Oil and Energy Ministers gathered in Vienna for the But there are some pertinent facts to consider here. As OPEC 166th Meeting of their Ordinary Conference towards the end of Secretary General, Abdalla Salem El-Badri, pointed out at the press November, they were confronted by the largest assembly of jour- conference — for the past few years, the Organization has more nalists, photographers and analysts the Organization’s relatively- or less been producing what it said it would — 30m b/d. That has new Headquarters in the Austrian capital’s historic First District been the call on the Organization’s oil and that is what its Members Commentary has ever seen. In fact, such was the response to the end-of-year have produced — and will continue to produce in the first half of Ministerial talks that the customary ‘meet and greet’ of the Ministers, 2015. The epitome of stability, one would say. But what of the oil held especially for the media ahead of the plenary session, had to producers outside the Organization? Again the OPEC communiqué: be staggered for safety reasons. “… although world oil demand is forecast to increase during the For the past few years OPEC Ministerial Meetings have, by year 2015, this will, yet again, be offset by the projected increase comparison, been quite muted affairs, as far as the international of 1.36m b/d in non-OPEC supply … giving indications of an ex- press is concerned. But the fact is that since the aftermath of the tremely well-supplied market.” Already in 2014, non-OPEC output global economic collapse — specifically from around 2011 on- growth stands at 1.72m b/d, as stated by the OPEC Secretariat in wards — the oil market has been performing well. Supplies have its Monthly Oil Market Report (MOMR) for December. It means that been more than ample, stocks acceptable and, most importantly, total non-OPEC oil supply for the year will now be 55.95m b/d. prices averaging at just over $100/barrel have been a good fit So, given this scenario, who should be expected to cut produc- for the producers and consumers, as well as for the investors. As tion to put a floor under prices? far as the Organization and its 12 Member Countries were con- As to the reasons behind the recent price decline, OPEC cerned, there was no need to make any adjustment to existing Conference President, Abdourhman Ataher Al-Ahirish, Libya’s policy measures at their successive Conferences. Rolling over Vice Prime Minister for Corporations, pointed to a combination of their production ceiling of 30 million b/d proved time and again key factors in his opening address to the Ministers: ample supply, to be the best option. moderate demand, a stronger United States dollar, uncertainties As a result, media coverage of their Meetings began to take on about global economic growth, as well as the impact of specula- a lesser relevance. But this was somehow reassuring. There was tive activity in the oil market. He warned that if the current situ- a feeling of calm — instilled by a relatively stable oil market. That ation with prices persisted, the long-term sustainability of capac- all changed for OPEC’s November Meeting with the Organization’s ity expansion plans and investment projects may be put at risk. Secretariat finding itself inundated with requests for accreditation. He also asserted that the recent price developments were a sign OPEC has long stood on a pedestal — a reflection of its 54 years that the oil market was currently searching for stability and bal- of experience. When problems occur in the oil market — the most ance. Well, in adhering to its long-established 30m b/d ceiling, recent disturbance being the slump in crude oil prices — the spot- OPEC, for one, is making its contribution. light invariably falls on the Organization for an answer. Hence, the Dialogue and cooperation have long been watchwords for OPEC. increased media interest at OPEC’s latest Meeting. Expectations Over the years, it has taken part in various discussions with leading were high ahead of the talks that the Organization would react to non-OPEC producers — and they have been reasonably successful. the current price decline by cutting its 30m b/d ceiling. It is a sac- The Organization has repeatedly stressed — and rightly so — that rificial measure the Organization has made on several occasions in it cannot singlehandedly solve the problems of the oil market and the past. Not this time, however. After over three hours of intense nor should it be expected to. OPEC Secretary General, El-Badri, has deliberation, the Ministers decided that in the current uncertain said at international energy fora that the Organization stands ready climate, maintaining the status quo was again the best course of to talk to anyone — if it achieves the common desire of attaining action to take. The Conference communiqué read: “… in the interest a fair and orderly oil market that benefits all stakeholders. Surely, of restoring market equilibrium, the Conference decided to main- in this growing multilateral world, and particularly at this testing tain the production level of 30m b/d, as was agreed in December juncture, a combined and coordinated approach is increasingly re- 2011.” quired if the current challenges are to be overcome. Shutterstock Contents 4 40 Conference Notes 4 166th Meeting of the OPEC Conference convenes in Vienna 10 OPEC warns of risk to capacity expansion plans from lower oil prices 14 “Good outcome” to Meeting — OPEC Ministers Interview 22 Algeria’s ambitious oil and gas development programme already paying dividends Saudi Aramco 24 ‘Youth dimension’ a vital asset in Saudi Aramco’s transformation Presentation 28 The importance of data and analysis IEA Outlook 32 IEA points to growing importance of Middle East producers JODI Meeting 34 OPEC hosts JODI Technical and Inter-Secretariat Meeting Research Lecture 36 Chinese analyst shares outlook information with OPEC officials Energy Diversification 40 Saudi Arabia’s energy diversification ambitions on track Focus on Africa 46 Mozambique has potential to become top LNG producer World Energy Congress 52 Abu Dhabi to host 2019 World Energy Congress Publishers OPEC Membership and aims OPEC OPEC is a permanent, intergovernmental Organization, Organization of the Petroleum Exporting Countries established in Baghdad, on September 10–14, 1960, Helferstorferstraße 17 by IR Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. 1010 Vienna Its objective — to coordinate and unify petroleum Austria policies among its Member Countries, in order to Telephone: +43 1 211 12/0 secure a steady income to the producing countries; an OPEC bulletin OPEC Telefax: +43 1 216 4320 efficient, economic and regular supply of petroleum Contact: The Editor-in-Chief, OPEC Bulletin to consuming nations; and a fair return on capital to Fax: +43 1 211 12/5081 those investing in the petroleum industry. Today, the E-mail: [email protected] Organization comprises 12 Members: Qatar joined Cover Website: www.opec.org in 1961; Libya (1962); United Arab Emirates (Abu This month’s cover depicts the skyline of Abu Dhabi, 1967); Algeria (1969); Nigeria (1971); Angola Dhabi, capital of the United Arab Emirates, which is to host the World Energy Congress in Website: www.opec.org (2007). Ecuador joined OPEC in 1973, suspended its 2019 (see feature on p52). Visit the OPEC website for the latest news and infor- Membership in 1992, and rejoined in 2007. Gabon Cover image courtesy Shutterstock. mation about the Organization and back issues of the joined in 1975 and left in 1995. Indonesia joined in OPEC Bulletin which are also available free of charge 1962 and suspended its Membership on December Vol XLV, No 9, November/December 2014, ISSN 0474—6279 in PDF format. 31, 2008. Anadarko Scott Laury Shutterstock 46 59 64 Newsline 54 Agreement between Iraqi Government, KRG hailed as “major breakthrough” 56 Kuwaiti Emir urges diversification, KOC set to explore offshore in 2015 57 Qatar’s Barzan gas field to see first production in 2015 58 Saudi Arabia committed to securing oil market stability — Naimi 59 UAE’s Ruwais refinery to reach full output capacity in early 2015 Secretary General’s Diary 60 Visitors to the OPEC Secretary General Briefings 62 Students at the OPEC Secretariat Arts & Life 64 Vineyards and pumpjacks — all in a day’s work in the province of Lower Austria Visits 70 OPEC delegation visits OMV’s exploration, production and refinery sites OPEC Fund News 72 OFID initiates concrete step in alleviating energy poverty 74 OFID signs loan agreements worth over $60 million 76 OFID to strengthen partnership with Austrian Development Bank Noticeboard 78 Obituary 79 Market Review 81 OPEC Publications 89 Secretariat officials Contributions Editorial staff Secretary General The OPEC Bulletin welcomes original contributions on Editor-in-Chief Abdalla Salem El-Badri the technical, financial and environmental aspects Hasan A Hafidh Hamid of all stages of the energy industry, research reports Editor Director, Research Division Jerry Haylins and project descriptions with supporting illustrations Dr Omar S Abdul-Hamid Associate Editors Head, Energy Studies Department and photographs. James Griffin, Alvino-Mario Fantini, Oswaldo Tapia Maureen MacNeill, Scott Laury Head, Petroleum Studies Department Editorial policy Production The OPEC Bulletin is published by the OPEC Diana Lavnick Dr Hojatollah Ghanimi Fard Secretariat (Public Relations and Information Design & layout General Legal Counsel Carola Bayer and Tara Starnegg Department). The contents do not necessarily reflect Asma Muttawa Photographs (unless otherwise credited) the official views of OPEC nor its Member Countries.