AN INCREASE OF OIL DEMAND BRINGS ABOUT A CHANGE IN ENERGY POLICIES FROM GOVERNMENTS AND COMPANIES.

July 1st 2008

Today, the third Plenary Session of the 19th World Petroleum Congress has focused on the topic of demand perspectives and its direct relation to today’s oil supply. This session counted on the participation of the most relevant personalities in this space, such as: Mª Teresa Costa, President of the Spanish Energy Regulatory Commission; Chengyu Fu, President of the National Offshore Oil Corporation; Christophe De Margerie, CEO and Chairman of the Executive Committee of Total; Chakib Khelil, President of the Conference of OPEC and Minister of Energy and Mines of Algeria, Rex W. Tillerson, President of ExxonMobil Corp and Anatoly Yanovsky, Russian Vice Minister of Energy.

During the session the speeches focused on some of the most current and hot topics of the energy sector today, including the role today of international regulators, the need of harmonisation of energy policies or the ever increasing energy consumption rates of developing countries.

Harmonisation of energy policies and the role of regulators

According to deliverability challenges, Mª Teresa Costa discussed the importance that international regulators are gathering in the energy sector, and that they are doing so on an international basis. Summarising the role of these regulators in two main functions she states: “Regulators should be able to coordinate tasks in order to create a situation of real competition in markets, as well as ensure an effective supervision of this for efficiency and transparency”.

Chengyu Fu emphasised the current existence of strong governmental protection that prevents the energy sector from developing natural synergies that may otherwise exist. Mr Fu states that; “the industry requires an increased amount of harmonization and consensus among governments, NOCs and IOCs”.

Anatoly Yanovsky, Russian Vice Minister of Energy, assured that:”We have energy that really works, but there are political obstacles. International legislation should be more transparent and should encourage collaboration” among governments and international companies. “It is important to cooperate and bring together our knowledge”.

Emerging countries

The role of emerging countries has been one of the main points of discussion during the course of morning. Some of the speakers stated that developing countries are a key factor when investigating the increase of oil demand, mentioning as an example, the cases of China and India. In words of Chengyu Fu, “these countries are in a process of industrialisation, which means a larger consumption of energy and resources”. Relating to this, Rex Tillerson declared that “the world’s general well-being has increased and, thus, so has the demand for energy, specifically in developing countries”. Tillerson, however, offered a positive perspective on the current global situation, stating that, after all, the growth of energy demand is a positive sign of economic growth on a global basis.

Decisive factors

Among the different factors analysed was that of new technologies and the role they play. It was agreed among participants that theses technological developments are significantly contributing to improve the oil extraction process, thus making oil reserves more profitable. Christophe De Margerie, President of Total stated: “We have to make an effort in the application of new technologies in order to increase our supply, even if it is easier to search in areas that are more accessible in economic and technical terms.”

Another important point that was discussed was the importance of OPEC in the current framework. The president of the OPEC, Chakib Khelil, defended the role of the international organisation, putting forward the numerous efforts carried out and stating that “nowadays, OPEC contributes with 40% of the global oil production, and it estimates that this percentage will rise and reach 52% in 2010”.

Youth

The commitment towards young professionals is one of the key values of the Congress, and this is what Christophe De Margerie highlighted in his speech. He believes that it is not a matter of ’disembarking’ senior members of the industry, but instead more of coexisting with young professional and showing them the key concepts of the sector, so that these in turn can put forward new ways of thinking during this phase transition that the energy sector is experiencing.