Eni SPA Chairman Paolo Scaroni, addressing a ministerial meeting of the International Energy Agency in Paris, sharply disagreed with the organization's assessment of the impact of the so-called Arab Spring on oil and gas investment.
In his speech, Scaroni told world energy ministers and industry leaders that while "the potential impact of the Arab Spring on energy security is difficult to assess, there are at least three reasons to be optimistic."
He said, "The first is that the way the crisis went in Libya is an exception," adding that countries such as Egypt and Tunisia "have managed things without losing a single barrel of production."
Scaroni said the second reason concerns Libya, which "after months of battles, has very quickly returned to the global market and Eni, the most important energy company in the country, has already resumed production of oil and started to export gas."
Not least, said Scaroni, "The oil contracts are legally binding, even in times of regime change."
Scaroni said Iraq represents the third and most significant reason for optimism. "It has great potential with giant fields that are relatively simple from a technical point of view."
Whether Iraq will achieve "its target of producing 12 million b/d in 2017, equal to 40% more of current Saudi production, is still an open question," said Scaroni.
"However, there is no doubt that Iraq will be a factor for change in the oil sector, and our experience in the Zubair field confirms the fact," Scaroni said.
In September, Eni said in a development plan that Iraq's Zubair oil field is expected to reach its peak output target of 1.2 million b/d by the start of 2017.
To help reach that goal, an Eni-led consortium, which includes Iraq's Missan Oil Co., Occidental Petroleum Corp., and Korea Gas Corp., plans to invest $18 billion in the southern Iraqi oil field.
Scaroni's remarks contradicted IEA Chief Economist Fatih Birol who said the Arab Spring had dampened investment plans in oil and gas projects as governments in the Middle East and North Africa focus instead on meeting popular demand for social change.
The IEA believes that 90% of the growth in oil production in the next 10 years needs to come from MENA countries.
In an excerpt from its World Energy Outlook to be published on Nov. 9, IEA said $10 trillion would be needed for oil investments, $16.9 trillion for electric power, and $9.5 trillion for gas from 2011 to 2035.
"One of the question marks is over the [MENA] region, which is crucial to meet demand growth and to meet decline in the existing production" of oil, said Birol.
"In some countries because of the unrest the projects are not going forward as much as we would like to see," said Birol, without naming any country in particular.
"In other countries, they are not able to put money for projects on the table because they have other pressing issues in their countries to meet demands from the population," Birol said.
"Some countries seem to follow different oil policies not to raise production as much as the market would like to see," said Birol, apparently repeating earlier criticism of Saudi Arabia which has vowed not to increase its production capacity (OGJ Online, Oct. 11, 2011).
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