The theme of ‘Strategies for the New Energy Landscape’ for the 2016 edition of ADIPEC is more important than ever for the oil and gas industry, explains His Excellency Suhail Mohamed Al Mazrouei, UAE Minister of Energy.
The oil and gas industry is searching for ways to maintain productivity and boost profitability, especially during the current era of low crude prices. This year, the theme of “Strategies for the New Energy Landscape” at The Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) will be particularly pertinent, with Abu Dhabi being the ideal venue for this dialogue to take place.
Over supply of crude to the international market has been a key theme over the past 12months, and one that will no doubt dominate discussions at this year’s ADIPEC. Last year, I said that we had an over supply problem that was not created by OPEC, but that OPEC were the ones being asked to solve it. Everyone said it was not their problem, but it’s everybody’s problem. The falling oil prices have incentivised everybody to react.
OPEC’s strategy is working in that we have seen a major reduction in the yearly gradual increase in production from the non-OPEC producers. Let people compete and let the price be the judge. Oil producers will not produce if they are losing money. But if you’ve already invested in the market, then you are not going to close the wells. The industry will survive this low. This is precisely why the theme of “Strategies for the New Energy Landscape,” is so important.
National oil companies (NOCs) and International oil companies (IOCs) alike are trying to focus on the efficiency of their operations in order to maximise profitability during these difficult times. ADIPEC 2016 will provide a huge range of plenary speeches and conference sessions that will address future strategies facing the hydrocarbon sector directly, acting as a platform for knowledge sharing and innovation.
The world is moving towards an equilibrium. The market is going to take a bigger share in putting the price in an envelope that is comfortable for all. I don’t think any of the IOCs will tell you that they are comfortable producing in the current price environment.
We have seen a significant drop in the level of investment. But we need to look at the bright side as well, because it is working, as producers are not growing their production – that’s going to eventually fix the glut.
Last year, I thought that it would take one to two years, depending on the level of cooperation [between oil producers]. There is still hope that during 2016 we will see a correction. It will not be in the first quarter, or the second quarter – the first six months of 2016 are going to be tough. Despite the challenging market conditions, the response we have garnered at ADIPEC last year is a sign of optimism in the oil and gas industry and testimony to the energy sector’s resilience. Yes, we are facing challenges, but the energy sector will always find its way around them through cost optimisation, innovation, developments in technology, and industry collaboration, all of which ADIPEC enables. The event’s ongoing success is part of the leadership’s vision to make Abu Dhabi the global capital of the energy sector.
It is going to be a very interesting year. I look forward to exploring these and other ideas with you in Abu Dhabi at ADIPEC 2016.