The world has sufficient oil resources but needs capacity to explore and deliver the product, Saudi Arabia’s minister of petroleum and mineral resources said on Tuesday.
Ali Al-Naimi said the problem is not one of availability, but rather one of ”deliverability” — the capacity to explore, produce, transport and deliver oil.
”There will be no scarcity of petroleum in the foreseeable future,” he told the 18th World Petroleum Congress in Johannesburg.
Prices are under pressure because the petroleum infrastructure is stretched.
”Much of the spare capacity of the 1980s has disappeared. Refining capacity has not kept pace with the demand for environmentally friendly oil.”
Al-Naimi said fears of oil scarcity, which surfaced in the 1970s, have not been realised.
”The resource base is more than sufficient to meet demand,” he assured delegates.
Saudi Arabia’s growth in reserves, to 264-billion barrels, has been driven by technological advances that make it easier to discover new sources of oil.
Al-Naimi added that vast areas of the kingdom have yet to be explored.
Over the next three years, a rise can be expected in Saudi-Arabia’s maximum current oil-output capacity.
”By 2009, Saudi Arabia maximum capacity will be 12,5-million barrels per day,” the minister said.
Need for stability
He said recent volatility in the oil price is not conducive to expansion, as investors want stability and predictability.
This desire is undermined, among other factors, by a lack of reliable oil supply data and the proliferation of regulations.
”We must proactively confront the deliverability challenge to ensure a stable market,” he said.
More should be done to remove obstacles to the expansion of resources and remove bottlenecks, such as dialogue between producers and consumers.
While natural disasters such as hurricanes Katrina and Rita highlight the fragility of the world’s energy delivery system, the industry is resilient.
”I want to assure you today that there is no reason to panic. Ours is a resilient industry built on overcoming challenges,” Al-Naimi said.
The quest for cleaner sources of energy will not pose a threat to oil dominance.
This is because technological advances are making it possible to create cleaner fuels and reduce pollution, Al-Naimi said.
Energy sources, such as solar, wind or nuclear power, will not replace petroleum as there are currently no competitive alternatives to petroleum-derived fuels.
Al-Naimi, however, conceded the world will at some or other time need other sources of energy.
”There is no question that the world, in the next 30 to 50 years, will need another source of energy. In the meantime, let us enjoy what we have to sustain world economic growth.”
‘Remarkable’ recovery
Also on Tuesday, ExxonMobil president Rex Tillerson told the congress that the oil-producing industry has made a remarkable recovery after Hurricane Katrina.
”There was a rapid, market-driven recovery. Within two weeks, all but 15% of oil and 6% of gas production was restored,” he said.
Global energy markets rose to the challenge, and market mechanisms and financial institutions operated smoothly.
Governments eased regulations and oil stocks were released.
Tillerson said the world needs to ”urgently rise” to the challenge of meeting the next generation’s energy demand.
Damage inflicted on the United States oil industry by Hurricane Katrina underlined the importance of energy and the world’s interdependence in this regard.
Between two and seven trillion barrels of oil remain to be discovered.
He said energy demand is expected to increase by 50% in the next 25 years. About 80% of this demand will come from the developing world.
”We must invest wisely and continue technological innovation,” Tillerson said.
”The global resource base has not reached its peak. Making an assessment of the resource base is very difficult because you have to assume what the resource base is,” he said. — Sapa