OPEC: Oil Here to Stay

OPEC: Oil Here to StayOPEC: Oil Here to Stay

On the sidelines of Munich Energy Conference in Berlin, Omar Abdul-Hamid, the director of the Research Division of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, in an interview with the Siemens global website said," News of the end of oil has been exaggerated. We saw on average 91 million barrels of demand every single day in 2014. By 2040 we expect 111 million barrels of demand per day. We at OPEC believe there are sufficient resources to satisfy growing demand for oil. Having said that, the share of renewable sources of energy such as solar and wind is still modest but is expected to grow in the future."

Abdul-Hamid added," New capacities from unconventional sources are a case in point. Demand growth mainly comes from emerging economies and developing countries, particularly in Asia, and from OPEC member states. Developed countries are reducing their oil consumption due to increasing fuel efficiency. Demand for oil will be in transportation and petrochemicals."

Underlining the fact that new sources of energy complement existing ones he says," Coal was dominant globally before oil entered the market. But we continue to live with demand for coal even as gas has become a major source of energy. Mankind will keep using a lot of fossil fuels, both in short term and long term."

On the critical issue of low current price of oil that is putting pressure on producers Dr. Abdul-Hamid reiterated," Changes in oil prices are not new and cost effectiveness will continue to be an important feature. Before the oil price tumbled in late 2014 and early 2015, it maintained high levels for a number of years. This may have bred some degree of complacency. It is healthy to step back to practices that help to control cost of capital and operation."

In Abdul-Hamid's view, oil companies and investors should assess opportunities to plan and finance facilities that supply energy in response to growing future demand. Innovation is important for accomplishing this in a cost-effective manner. Using data in a smart way can help improve exploration for oil and optimize recovery. It can help at every step in the production chain. Automation will become more important in the oil industry, too.