HOUSTON ? The growing tensions between OPEC and non-OPEC producers came to the fore at a global energy conference here Monday.
OPEC producers fear any cuts within their output could be immediately substituted with nimble U.S. shale oil producers, leaving the audience with lower oil revenues with little effect on prices, a panel discussion at the IHS Ceraweek event here heard. The 2 camps blame one another’s rising production for driving oil prices for their decades-low level.
“I don’t know how we are likely to live together (with shale),” OPEC Secretary General Abdalla Salem El-Badri said, noting any decrease in OPEC production could be immediately substituted with U.S. shale, leaving oil prices low.
“Because of high prices, we’d high supply,” Badri said. “In 2013, 2014 and 2015, we see non-OPEC increasing production by 5 million (barrels per day), while OPEC didn’t increase C yes we did in 2015, but not in other years.
“At OPEC we’re willing along with other producers to locate a solution.”
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Canadian and U.S. oil production over the past few years has put into the worldwide production glut, with shale oil from the Bakken, Eagle Ford along with other North American basins at the forefront.
“I don’t know why the United States – really wants to export, but simultaneously, they would like to import and store it. I’m not the way we are we able to tackle it,” Badri said, noting that OPEC has regular discussion with other rivals, aside from america.
Oil prices jumped US$1.84 or 6.2 per cent Monday to US$31.48, after the International Energy Agency raised about oil prices balancing themselves in 2017, and rising to as much as US$80 per barrel by 2020.
Badri, however, was skeptical that oil could recover inside a year’s time.
“I hope we are able to solve this problem by 2017, but this cycle is very nasty,” he explained, noting that he personally had witnessed six boom and bust cycles.
Meanwhile, the International Energy Agency, addressing oil consuming countries, believes OPEC countries, based mostly in the centre East, continues to dominate global oil production.
“The center East will remain in the centre of global oil markets for years to come,” said Fatih Birol, executive director from the IEA.
However, the most recent downturn will reduce the group’s revenues to US$320 billion this season, compared to US$1.2 trillion in 2012, the IEA estimates.
Meanwhile, non-OPEC producers including Russia and also the Usa might find the largest decline in production over the next few years, the IEA notes.
Canadian production will continue to increase over the next few years, but will plateau by 2021, especially if oil prices remain low.
“With non-OPEC output on the right track to say no in 2016, OPEC increases its share of the market, only briefly,” the IEA said. “As non-OPEC growth resumes from 2018, with little new OPEC capacity scheduled in the future online, the pendulum swings another way.”
OPEC’s proposal to freeze oil production between key members and Russia have also not yielded any improvements yet, however the Secretary General said it was the first step that may be expanded to include other countries.
“Iran and Iraq right now, they listened, and they’ll come back later,” Badri said.
The senior oil executive said OPEC remains as relevant in these tough market conditions. “We are not dead,” he said. “We’re alive and alive and alive.”
yhussain@nationalpost.com
Twitter.com/YAD_FPEnergy
