After three years of relatively stable oil prices averaging around $100 per barrel, the sharp decline which began last summer has shaken the industry with the repercussions being felt across the globe.
This was underlined when I attended the OPEC Summit in Vienna this month where a number of highly regarded industry speakers, provided different perspectives on the reasons for the fall in oil price and their take on what we must do to survive and come out fighting when the market picks up.
Many believe the commodity price slump was a direct result of the sudden increase in global supply due to the US shale revolution. Others attributed it to geo-political reasons while others argued that it was cyclical, following years of high oil prices.
However, there is no denying that the world energy map has changed and the global energy mix is more diverse. New supply sources have emerged as the oil and gas industry continues to pioneer a host of new technologies and techniques which have enabled us to unlock new conventional and unconventional sources of energy, from oil sands, ultra-Deepwater, shale and Arctic reserves.
Everyone agreed that for the key energy suppliers to continue their quest to fulfil their respective roles in meeting global energy demand, we will require policies that recognise the need for sustained investment, innovation, and cooperation.
It will be also be up to our industry to continue to pioneer the technologies that will expand supplies while achieving our shared goals for increasing efficiency, reducing emissions and mitigating the associated risks.
As an industry we cannot lose sight of our roles and responsibility in meeting the world’s energy needs. We share common goals and it’s time to work together more closely.
OPEC’s mission was clear – to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilisation of oil markets in order to secure an efficient, economic and regular supply of oil to consumers.
Insightful presentations and panel discussions took place in an effort to move the energy debate forward, discussing a wide range of topical issues affecting the industry, both in the short and long term, against a backdrop of price and geo-political uncertainty and instability.
The overall message at the two day seminar was not to panic. There are important issues to be addressed and strategies to be agreed, but this cannot be done overnight. Oil prices must be high enough to ensure a fair return for producers and to secure future investment, and it was agreed that both government and industry have a role to play in this cooperative effort.
Industry must continue to operate with safety and integrity to fulfil this fundamental responsibility. Our advanced technologies and techniques have been proven in some of the most delicate ecosystems and harshest environments around the world and, as we face a future dependent on innovation, the world will be best served by efficient, market-led solutions.
Governments around the world must also put in place sound tax, legal, and regulatory frameworks to attract investment, drive innovation, and encourage cooperation.
OPEC’s decision to maintain production at 30 million barrels a day is part of a wider strategy to maintain its market share.
There was a feeling of confidence that excess supply in the oil market will ease later in the year as demand picks up and supply slows. However, the over-riding messages of keeping calm and addressing the underlying challenges of cost efficiency and the need for a behavioural change to collaborate more widely across the industry must be applied to every region.