By Clara Nwachukwu, Vienna, Austria
The 5th OPEC International Seminar, kicked off inVienna, the capital ofAustria, Wednesday, with calls for greater attention on educating the global economy more on the oil market fundamentals, the deployment of more sophisticated technology to drive the development of a variety of energy mix.
Speakers at the seminars also maintained that for there to be sustainable and sufficient energy supply, the world must imbibe the culture of efficiency as well as increasing the efficiency of energy use.
Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, who chaired a session on Oil and the World Economy, noted that oil prices were increasingly tied to global economic growth.
She said: “In terms of growth energy and in terms of demand, when we talk about oil, especially where developing economies are concerned, we need to look at managing growth in terms of sustainable price, and managing energy poverty. The poorest countries suffer the most in high oil prices.”
In the case ofNigeria, Alison-Madueke noted that the country was blessed with abundant oil and gas resources, adding that the Federal Government was currently promoting the use of natural gas as feedstock, as opposed to conventional fuel.
She noted: “Under our commercialisation programme for economic growth, we are building industries such as petrochemical plants, fertilizer plants, methanol plants, central processing facilities, etc. that will in turn, ensure that our economies have job creation for now and for the future. At the end of the day, that also affects the oil cycle and the economy at very fundamentals.”
Need to reduce market volatility
Speakers in this session, which included the oil ministers ofEcuador,Iran,Indiaas well as the Chief Executive of the International Finance Corporation and a market analyst, harped on the need to reduce market volatility in oil prices, for sustainable economic growth.
Specifically,Ecuador’s minister, Mr. Wilson Pastor-Morris, argued that market fundamentals in terms of demand and supply remained very strong, as oil price performance affects the global economy.
His Iranian counterpart, Mr. Rostam Ghasemi, noted:“Market volatility adversely affects the world economy” especially the developing poor countries, adding that if Europe made good its threats to impose sanctions against Iran (OPEC’s second highest producer, after Saudi Arabia) over nuclear activities, it would further aggravate market volatility and spike off higher oil prices.
According to him, “Sanction will increase price and market volatility, and sufficient and sustainable supply of energy will ensure stability of price.”
Reiterating the impact of high oil prices on the world economy, particularly the consuming nations, the Indian minister, Mr. Jaipal Sudini Reddy, said: “High international oil prices lead to domestic inflation, increased costs, increase in budgeting, which in turn, increases interest rates and exchange rates.”
He estimated that at a sustained $10/barrel increase, high oil price would lead to a reduction of 0.5% of the GDP of developing nations.”
Using his country as example, Reddy noted thatIndia’s Gross Domestic Product, GDP, in 2011 fell to 6.9% down from over 8% in the previous years.
Earlier, speaking on the ability of the Organisation of the Petroleum Exporting Countries’ OPEC, ability to sustain crude oil supply, its President, Mr. Ali Naimi, argued that the organisation remained committed to its set objectives, one of which is to maintain price stability and reduce unnecessary market fluctuations.
He added that this is one of the reasons why OPEC deems it fit “to sit back and review current situations from time to time.”
Niami, also the Saudi Arabian Minister of Petroleum and Mineral Resources, further noted that during such periodic reviews, the organisation equally take into consideration the world oil market, the deployment of technology, protecting the environment in its areas of operations as well as maintaining global economic stability.
Also speaking, OPEC’s Secretary General argued that there was no fear of the 13-member countries organisation not meeting current and future energy demand, as members had the resources and capacities to meet rising demand.
According to him, “Can OPEC meet rising energy demand,, Yes, we can; this is nothing new for the industry, and we have always been able to deliver, and that is why members are making significant investments, as there are about 116 ongoing projects worth over $280billion,” adding that technology advances will continue to expand the niche of the industry.