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The age of oil and gas is not dead yet, says Energy Minister
01 June 2010
"In the world of energy, there is one certainty, namely that the age of oil and gas is not dead! Indeed, it has a long life ahead of it," Al Hameli said while addressing the 17th International Caspian Oil '&' Gas Conference in Baku.
"OPEC's Reference Case Scenario sees total energy demand growing by 42% between 2007 and 2030. On the back of this, demand for oil will continue growing strongly; rising from the 2009 level of 84.3 million barrels per day to 106 million barrels per day in 2030," he added.
Al Hameli said that recent weeks saw renewed volatility in international oil markets with prices peaking about $87 and then falling below $70 .
"For producers and consumers alike, maintaining stability is critical so that we can plan the long term investments that are required to develop existing and new hydrocarbon resources." "There is a natural tendency to focus on short-term factors - such as currency instability, supply disruptions and geopolitical concerns - that result in market volatility. We need to focus on the long-term fundamentals of the oil market and to ensure that the global economy resumes growth, because these factors - rather than short term fears - is what will allow us to reconcile sustainability and security of supply and demand." The medium term outlook is also looking moderately promising. Global oil demand growth in 2010 will be 900,000 b/d thanks largely to continued economic growth in China. This year, the world economy is expected to grow by 3.5%. Despite ongoing instability in the Eurozone, the US, Japan and China are all showing encouraging signs of recovery.
He went on to say that global economy is improving, but the challenges of sovereign debt in the developed countries, the ability of China to avoid overheating and persistently high unemployment levels, are all risk factors that could have an adverse effect on global markets.
Improved technology, successful exploration and enhanced recovery have enabled the world to continually increase its resource base to levels well above past expectations. In a world where oil demand is set to increase, we cannot afford to leave 65-70 % of proven reserves in the ground. The petroleum industry needs to allocate adequate resources to surmount this hurdle.
In addition to conventional oil, there is also a vast resource base of non-conventional oil - such as tar sands, oil shales, gas-to-liquids, coal-to-liquids and bio fuels. Major investments are needed to turn these reserves into a steady and sustainable supply of hydrocarbons. These investments can be realised only if price levels sufficient to produce from these sources commercially, are maintained.
Al Hameli praised UAE's relations with Azerbaijan, saying both countries are important oil producers and that they were united in their desire to create a long term sustainable future for industries and for nations as a whole.
"Azerbaijan, of course, is fortunate to have potential for further oil reserves growth. However, it is becoming increasingly clear that, after decades of oil production, much of the world's easily discovered mega fields have been located. It now takes all the advances in geoscientific knowledge and innovative technologies to discover new fields. Many oil producers, including my own country, are embarking on capital-intensive enhanced oil recovery projects, which are required to maintain production over the long term." Al Hameli underlined UAE selection as the host country for the new headquarters of the International Renewable Energy Agency. Today, I would like to thank the Republic of Azerbaijan for its support for our candidacy to bring the IRENA headquarters to Abu Dhabi.
"We believe that the best way of securing a sustainable economic future in a carbon constrained world is for all nations to develop a balanced portfolio of clean energy sources in which nuclear, renewable energy, oil and natural gas all have a role to play.
Renewable energies need to be harnessed according to each country's natural resources. For example, the UAE's geographic location will enable us to utilize solar energy to the maximum as soon as efficient advanced technology to harness solar energy on an industrial scale is developed. Wind and wave energy are other sources that we are considering." By hosting IRENA in Abu Dhabi, the UAE is seeking to promote a sustainable future in the world as a whole. In a parallel initiative, it has launched a multi-billion initiative known as Masdar, which is a global cooperative platform for the open engagement in the search for solutions to some of mankind's most pressing problems: energy security, climate change and human expertise in sustainable development. Masdar is building the world's first carbon-neutral city in Abu Dhabi and among the first tenants will be the IRENA headquarters.
"Over the coming months and years, Masdar will offer multiple opportunities for collaboration and I would encourage all countries in the Caspian region to play a part in this exciting venture," he concluded.