World dependence on Middle East oil to grow
Oil importing countries' dependence on Middle East supplies will grow until additional conventional sources are identified and become cost competitive, according to speakers at a Gulf Cooperation Council conference. The investment needed for fossil fuel development for the next 25-30 years will be about $200 billion/year, one predicted.
MANAMA�Oil-importing countries' dependence on Middle East supplies will grow until additional conventional sources are identified and become cost competitive, speakers said at a Gulf Cooperation Council conference here.
The investment needed for fossil fuel development for the next 25-30 years will be about $200 billion/year, said Anwar al Abdullah, head of the oil department at the GCC secretariat. In meeting this goal, he said, the oil industry faces many new challenges, including climate change, refining industry revitalization, renewable energy, World Trade Organization policies, globalization, oil taxes, and domestic subsidies.
Not the least of the challenges is being able to ensure that oil production capacity is sufficient to meet consumer needs, al Abdullah said. "This daunting task must be tackled in a climate of increasing globalization of oil and other industries, continuous cost pressures, and environmental sensitivities," he observed. "These aspects should be considered in the spirit of forging partnerships with the GCC to achieve common goals."
Al Abdullah said the pillars of the GCC oil policy are commitment to open market principles, security of global energy supply, and cooperation between producers and consumers. The GCC has an established track record of accepting its responsibility for moderating disruptive price volatility and balancing the physical needs of the global market during normal times and crises, he said.
"Of course, the GCC and other oil-producing countries cannot achieve this balance alone but require the goodwill and cooperation of consumers," he pointed out. GCC members include OPEC member countries Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates, and non-OPEC members Oman and Bahrain.
Despite the strides in technology that have reduced operating costs for the past 2 decades, the challenges ahead are immense, said Sadad Ibrahim al Husseini, executive vice-president of Saudi Aramco. Energy demand continued to grow at a rate of 1.5%/year for oil, while capacity decline 3-4%/year, he said. To satisfy this requirement, upstream investments among 182 major companies grew from $55.8 billion in 1994 to more than $102 billion in 1998.
Ultimately the GCC, with 670 billion bbls of oil reserves and 1,970 tcf of gas, will remain the cornerstone of the global energy structure, he maintained. "In addition, the abundance of uncovered oil in place and potential reserves provide an ideal opportunity to deploy future technologies and sustain the region's pre-eminence in the energy industry," he added.