Oil industry executives, petroleum ministers and other role players traipsed into Johannesburg recently for the so-called “Olympics of the global oil and gas trade”, which was staged in Africa for the first time.
The event itself was the 18th World Petroleum Congress (WPC), which brings together the World Petroleum Council’s 60 members, representing more than 90% of the world’s consumers and producers of “black gold”.
Saudi Arabian Minister of Oil Ali al-Naimi blamed the high level of oil prices on the scarce oil capacity outside Saudi Arabia and on bottlenecks, such as shortages in refining capacity, in the international oil supply chain. Saudi Arabia is the world’s largest producer and exporter of oil.
Brent crude oil is currently trading between $60 and $65 a barrel and recently climbed to an all-time high of more than $70 a barrel.
WPC president Eivald Roren told the conference there was a “new balance” in the world petroleum market. He also highlighted the limitations on global refining capacity.
Roren said that the world was set for a new level of oil price, with the old level of between $20 and $30 a barrel being a thing of the past. The world had to accept the current prices as the new reality, he warned.
Issues such as sustainable development, alternative fuel sources, carbon dioxide emissions, climate change and the environmental impact of the oil sector were raised, but were not engaged with the robustness they required.
Roren admitted that tremendous amounts of carbon were being emitted by the petroleum and other industries, but dashed any hope of an immediate solution when he promptly added that, while pilot projects were in place to store carbon dioxide safely, the technology wasn’t free.
The delegates instead devoted their time to identifying obstacles to the introduction of alternative fuels. These were technological, infrastructural and related to distribution, as well as the existing high cost of alternative fuels in comparison with conventional fuels.
Hydrogen, for example, would face tremendous difficulties in terms of infrastructure and supply chain, especially given the infrastructure established by the oil and gas sector over the past 100 years.
Iceland, for instance, expected that its hydrogen energy project would take 50 years to implement fully, speakers said.
The overall tone of the speakers at the WPC was that crude oil would remain a key source of fuel, especially for vehicles. Professor Masayuki Sananouchi, an environmental affairs official from the Toyota Motor Corporation in Japan, said that many governments and NGOs had the impression that new fuel sources, to replace petrol and diesel, were coming soon. “We don’t think so,” Sananouchi told delegates at a round-table discussion.
The lack of willingness to encourage alternative fuels was also reflected by comments from Qatari Minister of Energy and Industry Abdullah bin Hamad al-Attiyah, also MD of Qatar Petroleum, who jokingly said he hoped renewable energy would not come to fruition.
Many of the companies and representatives at the conference were quite complimentary about Africa’s oil potential. “Africa is one of the most promising regions in the global oil and gas arena, holding large, untapped hydrocarbon reserves,” said Roren. Whether that potential can be harnessed to the benefit of Africa’s poor remained off the agenda.
Justin Brown is a commodities reporter for I-Net Bridge