Al Hameli :OPEC to keep oil market well supplied

UAE Minister of energy  Mohammed bin Dhaen Al Hameli affirmed today that OPEC member countries’ commitment to provide adequate, secure and affordable oil supplies to the consumers through continuing their huge investments in developing spare capacity production.

Addressing the International Energy Forum, which began today in Moscow, Al Hameli said that the UAE has demonstrated its determination to assume global leadership in the development of renewable energies through the Masdar Initiative.

He also noted that early signs of a gradual improvement in the world economy mean that global oil demand in 2010 could grow by 700,000 barrels per day.

Following is the text of Al Hameli’s speech: Your Excellencies, Ladies and Gentlemen Good Morning I would like to express my appreciation and thanks to HE Sergey Shmatko, Minister of Energy of the Russian Federation for inviting me to partake in the Fourth Energy Week. This conference, held in the vibrant city of Moscow, reflects the growing importance of the Russian Federation as a global energy producer and supplier.

Today, I would like to share with you the UAE’s vision for the future of the world’s energy market. It is an irrefutable fact that energy is one of the principal drivers of global economic development. Access to reasonably-priced, but above all, stable and secure energy sources is key to sustainable economic growth in developed and developing economies alike.

In the UAE, as major hydrocarbons resource-holders, we believe that we should do more than just reap the benefits of being blessed with ample hydrocarbon resources. We accept the burden of responsibility placed on us to ensure that we continue to deliver the oil that consumers need to fuel their economies and heat their homes. Along with other OPEC member states, we have in recent years invested heavily across the hydrocarbon value chain, to make sure that we are able to fully supply the call on our crude for many years to come.

Investments in the oil industry involve long lead and pay back times. OPEC member countries have in spite of the prevailing economic climate lived up to their responsibility towards assuring adequate, secure and affordable oil supplies through continuing their huge investments in developing spare capacity production.

Today, the economic downturn and the fall in oil demand mean that we are unlikely to see quick financial returns on the billions we have invested and continue to invest in new energy infrastructure OPEC studies predict a cumulative loss on output by 2013, of 8% for the OECD and 4% for developing countries. Demand for crude is falling and by the end of 2009 is expected to have contracted by 1.4 million barrels per day.

Fortunately, early signs of a gradual improvement in the world economy mean that global oil demand in 2010 could grow by 700,000 barrels per day. OPEC believes that the bulk of next year’s demand growth will take place in the non-OECD regions, mainly China, the Middle East, India, and Latin America. Most of this demand will be in the industrial, transport and petrochemical sectors.

Longer term economic growth forecasts, based upon assessment of demographic trends and productivity gains indicate that average global growth during the next decade could be as low as 3.4%. Figures such as these cannot fail to ring alarm bells in the oil industry raising questions about the long term demand for oil.

From a global perspective, such uncertainty raises the risk of reducing necessary investments in the oil and gas industry. However, allow me to make the UAE’s position very clear. In spite of the uncertainty of global oil markets and the effects it could have on government revenue we are committed to continue investing in both upstream and downstream sectors of the oil industry.

Ladies and Gentlemen, Oil and gas are valuable and precious commodities. Even though there is still plenty of oil and gas left in the ground, there can be no doubt that most of the so-called easy’ oil, from exploration, discovery and production perspectives, has come to an end. Increasingly, over the coming years we will see new frontiers emerging, both in terms of challenging geographical and environmental conditions, but also in terms of the sources of oil and the technology required to extract and process it.

Clearly, there is a need for increased research and development in the oil industry. The need to develop fields using enhanced oil recovery techniques, or tapping unconventional resources such as tight gas, or producing oil from tar sands, oil shale and from inhospitable environments will require new technologies and techniques. As producers, we cannot allow ourselves to continue to be overly-dependent on external parties to develop resources available to us.

We need to develop our own capabilities and our own technology. That is why in the UAE we are placing increasing emphasis on research.

As I said earlier, oil and gas are valuable commodities to be used responsibly, taking into account the need to protect the environment. Producers and consumers alike have a vested interest in ensuring that hydrocarbon resources last for as many generations as possible.

Over the past decades, the UAE has been a staunch supporter of the environment. We were one of the first countries in the region to ban gas flaring, even at the cost of losing oil revenues. More recently, the UAE has demonstrated its determination to assume global leadership in the development of renewable energies through the Masdar Initiative. The objective is not just only to reduce carbon emissions at home but also to play a leading role in the development of sustainable new energy technologies that can effectively contribute to the substantial reduction of global warming.

The creation of Masdar City, the world’s first carbon-neutral, zero-waste city, will put Abu Dhabi on the world map as the first truly bona fide green city.

The UAE firmly believes that the future of the planet lies in a balanced energy mix in which oil, gas, nuclear energy and renewables all play an important role. The UAE is proud of the fact that the recently-created International Renewable Energy Agency (IRENA) , an important new organisation to which 138 countries now belong, has chosen to make Abu Dhabi its new headquarters.

As we look to the future, the UAE remains committed to the vision that I have outlined to you today: a future where plentiful supplies of oil and gas are complimented by a range of alternative energy sources. It is, I believe, a vision that is shared by many of us here today.