OPEC ready to quench Asia's thirst for oil

Energy Minister Mohammed bin Dhaen Al Hameli reiterated readiness of the members of Organisation of Petroleum Exporting Countries (OPEC) to increase their oil production output to meet the rising demand in Asia.
Al Hameli, who is the current President of the organisation, said that OPEC members from the GCC countries were also prepared to provide additional supplies.

"There is no need to be skeptic about this. We are prepared to raise production when asked, and as we always did," he said in a speech delivered before the Middle East & Asia Energy Summit, currently held in Singapore under the theme "Asia's growing oil thirst: Will the Middle East be able to quench it?"

Answering the question: 'Asia's growing oil thirst: will the Gulf be able to quench it ' in a keynote address at the Middle East and Asia Energy Summit held in Singapore under the title ''Dialogue for investment and Security of supply for a sustainable energy future', Al Hamili said: 'There appears to be some doubt about the Gulf producer's willingness to raise their production to Levels that will satisfy the growing demand from Asia. There should not be. Speaking for my own country - the United Arab Emirates - as well as OPEC in general, we are prepared to raise our production to supply oil, when and where required, as we have always done'.

However, Hamili said that security of supply and security of demand are intertwined and need to be viewed in this context. He added that oil is equally important to the economic growth and prosperity of consuming-importing countries, as it is to the development and social progress of producing-exporting countries.
'So it is not just a question of supply as the title suggests, it is also a question of future demand'. Al Hamili reminded.

Economies, and consequently oil demand, can flourish and shrink and Asia is no exception. For most of the second half of the 20th century, the Japanese economy was growing .Then in the 1980s and 1990s, there was the rapid growth of the 'Asian tigers', and most recently, we have witnessed the massive advances in the world's two most populous nations, China and India. While these economic phenomena have had their ups and downs, one thing has remained constant: the steady supply of energy from the Middle East to fuel the region's growth; noted Al Hamili He also said that there have been times of increased oil demand in the Asian region, in every instance, demand has been met with adequate supply, with much of it coming from the Gulf region. In fact, if we take crude oil exports to Asia, Europe and the US, OPEC supplies more to Asia than the other two regions combined. At present, almost 50 per cent of OPEC oil exports are bound for Asia.

Oil is projected to remain the predominant source of energy for the coming several decades at least. Furthermore, proven oil resources are considered to be sufficient to satisfy demand for the foreseeable future. With the Asian region expected to see the biggest oil demand growth rates of any region in the world, the future relationship of these two regions is bright, predicted Al Hamili.
'These Asian countries which have seen phenomenal economic growth in recent years is in close geographic proximity to the Middle Eastern Region which is endowed with huge petroleum reserves. In fact, taken as a whole, OPEC Member Countries today hold approximately 78 per cent of the world's proven crude oil reserves with much of this in the Middle East.', noted the OPEC President.

Al Hamili said that OPEC Member Countries are making known well in advance their plans for significant production capacity expansion which is ear marked for satisfying growing demand for uninterrupted secure oil supplies, as well as offer an adequate level of spare capacity for the benefit of the world at large. In the medium-term, OPEC production capacity increase is underpinned by over 120 projects in the upstream sector with a total cumulative cost estimated to exceed USD150 billion dollars by 2012. These projects when completed are expected to add over 5 mb/d to current production capacity levels.

Al Hamili reminded about the 'significant uncertainties in future demand of oil. By 2020, the difference between the demand for OPEC crude between high and low scenarios is 9 mb/d. Moreover, this figure could be even higher if uncertainties over non-OPEC supplies are taken into consideration, he said.

On the other hand, without assurance that additional demand for oil is forthcoming, the incentive to invest can be reduced. This may lead to under investment and consequently a situation where consumers' needs cannot be met, Al Hamili warned.

Reassuring the willingness of Gulf countries to secure adequate supply of oil, Al Hamili noted the recent Riyadh Declaration of the third OPEC summit and said: The Gulf countries and other OPEC members are not only able, but they are ready, willing and are doing it.' Al Hamili concluded stressing the interrelationship between secure demand and secure supply and said: OPEC has maintained a secure, stable and study supply of oil since it was founded in 1960 and will continue to do so in the future. However, we need to complete the circle. It is not just about oil supplies; it is also about oil demand'. Source