A ramp-up in oil production by countries outside the Organization of Petroleum Exporting Countries in the short term could pose a "serious threat" to prospects for oil market stability in the long term, said the former secretary-general of OPEC, Alí Rodríguez Araque.
Rodríguez, who left his OPEC post earlier this year after being appointed president of Venezuelan state oil company Petroleos de Venezuela SA, made the comment in a talk before a plenary session of the World Petroleum Congress early this month in Rio de Janeiro. The congress concluded Sept. 5 (see related story, p. 22).
Non-OPEC threat
Rodríguez prefaced his warning about the non-OPEC market "threat" by stipulating a need for oil price stability for producers and consumers alike.
"It is evident that future fluctuations in the (gross domestic product) of consuming countries will have a direct effect on demand," he said, adding that a worsening global economy could slash oil demand and with it oil prices. And continued depressed oil prices would affect the long-term prospects for oil development worldwide, he noted.
"Recent history has taught us one clear lesson: Wild fluctuations in the prices of hydrocarbons are detrimental to consumers and producers."
Calling on producing and consuming nations to pursue a common target for oil price equilibrium, Rodríguez dismissed as "a utopia" any alternative energy solutions for the foreseeable future other than hydrocarbons.
He forecast world oil demand would jump to 91 million b/d by 2010 and cited other analysts' projections of 106 million b/d by 2020, up from the current level of 76 million b/d.
OPEC's role
"OPEC should capture the lion's share of the incremental demand and thus will continue to play a fundamental role in the world energy equation," Rodríguez said. However, short-to-medium prospects are "more complicated," he noted.
"…An abrupt increase in non-OPEC production, boosted by high levels of investment in the upstream area, could pose a serious threat to the majority of the main producers' efforts to achieve and maintain stability."
Rodríguez also cited the threat from the growing incursions by natural gas into oil's market share. He estimated natural gas will hike its overall share of the primary energy mix in the "medium term" to 29% from 23%.
"…The oil industry can look forward to excellent long-term prospects but will have to face hurdles in the short term," Rodríguez said. "To limit these effects, it is important that producers and consumers work hand in hand towards market stability and realistic price levels.
"Otherwise, short-term policies will impact the future development of the industry with negative consequences for the world oil economy."
