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energy


Abdalla Salem El-Badri, Secretary General, OPEC


G


iving an assessment of the global oil outlook for the short and medium-term is notoriously challenging.


But offering views on the outlook for investments in the industry, especially given recent economic and financial developments around the world, is even more difficult.


fast facts


- the organisation of the petroleum exporting countries (opec) was founded in Baghdad, iraq, in 1960 by five countries. currently, it has 12 member countries.


- opec countries supply about a third of the world’s oil.


- recently, the organisation cut its global economic growth forecast for 2012 to 3.6 per cent from 3.7 per cent.


50 / DECEMBER 2011


Continuing unemployment and a manufacturing slowdown in the US, as well as a growing sovereign debt crisis in Europe, have recently prompted OPEC to revise down its economic growth forecasts for 2011 and 2012 – and, consequently, oil demand. And despite rapid growth in developing countries, great uncertainties remain about a sustained and broad-based recovery in the major oil-consuming countries of the world. There is also the ongoing challenge of not having a sufficiently stable crude price environment. Our industry’s growth requires prices that are neither too high nor too low – and which are stable enough to continue to attract investments. We should not forget the experience of 2008 when extreme volatility resulted in prices rising to nearly $150/b and then falling to around $30/b by the end of the year. This led to the postponement or cancellation of more than 30 investment projects across our Member Countries. Despite the complex nature of the economic challenges, our Member Countries have an ongoing commitment to capacity investments. According to


our 2011 World Oil Outlook, which was released in November, OPEC Member Countries are expected to invest close to $300 billion in 132 upstream investment projects through 2015. Moving forward, of course, remains challenging. But such investments are, as I have often said, the lifeblood of the oil industry. Without investments now – in exploration, production and expanded capacity – future supplies may not materialise and future needs may not be met. And this is something neither consumers nor oil producers can afford.


Our Member Countries know this very


well. That is why OPEC consistently expresses its interest in ensuring the security of supply to all consumers and, through its Member Countries, maintains a commitment to investments in new projects. While the current global outlook


provides little security to producers and investors, we must remember that future oil supply depends on ongoing and timely investments in capacity expansion. They are central to ensuring future supply. What motivates us is, of course, an


interest in satisfying the world’s energy needs and striving towards stability in the market. This is what our Member Countries always try to keep in mind, in line with our broader organisational mission. It is only in this way that OPEC can continue to be ready to act when necessary – despite what the global outlook may show.


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