Although the market was currently well supplied, said Abdalla El Badri, the secretary general of Opec, his comments underlined the group’s importance in global markets. OPEC faces increased competition from rivals reaping the benefits of fracking technology, allowing long-time clients, such as the United States to decrease crude imports.
“While recent developments in the US have been transformative for its energy industry, we need to see how sustainable this type of production is in the longer term,” he said at a forum hosted by Gulf Intelligence in Muscat.
“Tight oil wells in the first year witness steep decline rates. It means that operators need to ‘drill, drill, drill’ just to maintain production.”
Opec will have to ramp up production from today’s levels of around 30 million barrels per day (bpd) to 37 million bpd by 2018 to make up for declines in North American production, said Mr El Badri.
In the short term, Opec producers are forcing themselves to undergo a self-examination as rising production in North America negates the need for some of their exports.
Non-Opec producers, led by shale oil developers in the US and Canada, are projected to boost output by 1.7 million barrels per day to 56.4 million next year, according to the International Energy Agency, the Paris-based watchdog.
Next week Abu Dhabi’s Emirates Center for Stretegic Studies and Research is to host a forum on what unconventional fossil fuels mean for the region.
“Let me stress here that this is a welcome development,” said Mr El Badri. “It adds depth to global supply, aids market stability and provides further proof to consumers that the world is not running out of oil. We hear very little talk of ‘peak oil’ today.”
An oil price between $100 and $110 a barrel was “acceptable” to producers and consumers alike, he said. Brent crude was trading slightly up yesterday at $109.97 in London.
“The economy remains the major worry, particularly in the short and medium term,” said Mr El Badri, pointing to the US, Europe and China.