By an OGJ Online Correspondent
PARIS, Feb. 6 -- Governments will structure the major evolutions of the future world energy scene, predicts Institut Français du Pétrole (IFP) Pres. Claude Mandil.
Mandil made the statement in Paris as he opened the recent Panorama, a review of the previous year's energy events.
He said the trend began a year ago when President George W. Bush demonstrated the new concern of the US for energy prospects with its proposed energy policy reforms. He said many other governments in countries, or groups of countries, also have showed the need to develop a longer-term energy and environmental strategy and are becoming more "interventionist."
Simultaneously, geopolitics are also making their return to the oil scene, Mandil said, noting the new relationship between the US and Russia. He said Russia wants to play a larger role on the oil scene and offer the US an alternative source of imported oil. IFP said "an objective alliance between Russia and the US might favor an average price hovering between $17-22/bbl, a stabilizing band which will make all actors happy except Saudi Arabia." It said the Saudis need a price exceeding $18 to maintain an uneasy social peace.
Looking at longer-term geopolitics (over 15 years), IFP sees a new world order emerging with two large blocks: America-Europe-Northern Asia led by the US (which would include Japan) and an Asian block (ranging from Beirut to Shanghai) led by China.
Africa, between the two blocks, would become a major strategic area, described as "an expansion joint." IFP noted the US already imports as much oil from western Africa as from the Middle East, and countries like Mozambique, Ethiopia, and Somalia have promising deepwater reserves. Although more expensive than Middle East oil, Africa's resources could develop as an alternative.
Mandil said Saudi Arabia has a short-term oil strategy counter to its long-term interests: instead of squeezing its competitors out of the market by swamping it with its abundant low-cost oil, it is playing a high-price game that can only reduce its long-term market share.
He said natural gas geopolitics and technologies are also undergoing deep changes. He said gas demand in high consumption areas can no longer be satisfied through local or nearby resources. At the same time, new production zones such as South America, the Middle East, and Central Asia are gathering momentum. Taken together, these two trends raise the matter of long-distance gas transport and the need for new cost-cutting technologies that are going to dominate the gas scene. A new future for methane carriers is opening up, he said, as well as the development of innovative solutions such as gas-to-liquids.