Oil Outlook: Challenges and Opportunities Keynote Speech Mohammed Barkindo Acting for the Secretary General Nigeria Oil And Gas 2006 3-5 April 2006 Abuja, Nigeria © 2006, Organization of the Petroleum Exporting Countries Introduction • Energy security must be seen from many perspectives • Recent price behaviour has moved the issue of energy security high up on the agenda • Non-energy commodity prices have also risen • Perceptions of capacity availability exacerbated by disruptions to the supply system and other factors • Security of supply and security of demand are two sides of the same coin • OPEC’s recent responses demonstrate the commitment to support energy supply security © 2006, Organization of the Petroleum Exporting Countries OPEC crude oil supply has risen 4.5 mb/d since 2002 30.5 30 Call on OPEC crude 29.5 OPEC crude production 29 28.5 28 mb/d 27.5 27 26.5 26 25.5 25 2003 2004 2005 © 2006, Organization of the Petroleum Exporting Countries OECD commercial stocks, month-ending million barrels Days of forward cover 2750 58.0 2700 57.0 2005 56.0 2650 2006 55.0 2600 2005 54.0 Avg. 2550 01-05 Avg. 53.0 01-05 2500 2004 2006 52.0 2450 51.0 2400 50.0 2004 2350 2001-2005 Max/Min 49.0 2001-2005 Max/Min 2300 48.0 Jul Oct Mar Apr Jan Feb Jun Dec Sep May Nov Jul Aug Oct Mar Apr Jan Feb Jun Dec Sep May Nov Aug © 2006, Organization of the Petroleum Exporting Countries OPEC capacity expansions up to 2010 should lead to growing spare capacity 40 38 call on OPEC crude OPEC capacity (end year) 36 34 32 30 mb/d 28 26 24 22 20 2006 2007 2008 2009 2010 © 2006, Organization of the Petroleum Exporting Countries But the downstream is also critical • Supply security relevant for entire supply chain • Inadequate investment in refining capacity a key factor behind recent price movements • Increasingly stringent product specifications • OPEC NOCs are undertaking part of the investments needed in the downstream • But the major responsibility lies with the consuming countries and international oil companies © 2006, Organization of the Petroleum Exporting Countries Fossil fuels will continue to provide the energy needed for socio-economic development 16000 14000 12000 Gas 10000 8000 mtoe Oil 6000 4000 Coal 2000 Hydro/nuc./ren 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 © 2006, Organization of the Petroleum Exporting Countries But oil demand growth is uncertain 115 110 105 100 95 mb/d 90 85 80 75 70 2000 2005 2010 2015 2020 © 2006, Organization of the Petroleum Exporting Countries Cumulative investment needs in OPEC: 3 scenarios 500 450 Uncertain future demand translates into a 400 broad range of possible OPEC investment needs 350 300 250 200 $(2005) billion $(2005) 150 100 50 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 © 2006, Organization of the Petroleum Exporting Countries Security of demand: a real issue • Security of demand and security of supply are mutually supportive • Security of demand is a legitimate concern of producers • Uncertainty over future demand translates into a broad range of potential levels of demand for OPEC oil • Investment requirements are large, subject to long lead- times and pay-back periods • More transparency in evolution and implementation of policies is key • Improved data availability and quality needed for demand and stocks, as well as other demand variables © 2006, Organization of the Petroleum Exporting Countries Gulf of Guinea is now the main supplier of sweet crude Crude supply from West Africa and North Sea, 2000-2006 6.0 North Sea 5.5 5.0 mb/d 4.5 West Africa 4.0 3.5 2000 2001 2002 2003 2004 2005 2006 e © 2006, Organization of the Petroleum Exporting Countries Dialogue and co-operation • OPEC continues to engage in dialogue and co-operation • Later this month, 10th International Energy Forum (IEF), Doha, Qatar, is an important meeting • IEF Secretariat opened in Riyadh, Saudi Arabia • OPEC a leading participant in the Joint Oil Data Initiative • Need for better data on demand and stocks: higher quality, timely • OPEC sees dialogue and co-operation among all parties as the way forward with regard to security of supply and demand © 2006, Organization of the Petroleum Exporting Countries Poverty eradication • The other two pillars of sustainable development are also crucial: economic development and social progress • Over 1 billion people live on less than $1 per day • Millennium Development Goal number 1: poverty eradication • Access to modern energy services must be improved upon • NEPAD spearheads efforts to alleviate poverty in Africa • Developed countries have commitments to fulfil, such as capacity building, technology transfer and financial resources © 2006, Organization of the Petroleum Exporting Countries www.opec.org Thank you © 2006, Organization of the Petroleum Exporting Countries.