The year 2008 could mark a milestone in the long history of petroleum, as the oil price crossed the highly symbolic threshold of $100 /barrel. This new development stirred debate all over the world, in oil exporting and importing countries, regarding its causes, sustainability and implications for both parties.
Indeed, whereas some perceive it as cause for alarm, others look at it as though it was a mere short-lived spike, in the current cycle of the petroleum industry. Yet a serene analysis of the current price environment, allows some interesting observations.
· There is a consensus that the current price include a significant share (up to one third according to several analyses) due to non market fundamentals;
· The yearly average price for 2007 was still lower than the highs reached in the early 1980’s, when put in real terms;
· The global economy has shown, over the last few years, a genuine resilience to this upward oil price path;
· The positive implications in terms of a more efficient use of a finite energy resource, less carbon emissions and a highly stimulating booster for the promotion of renewable energy sources, on the long transition road to a new economy.
From these observations, we can draw some conclusions regarding the challenges that the ongoing global energy trends raise for producers and consumers, but more importantly the multiple opportunities they offers for all stakeholders.
Indeed, if one third of the current price level is due to factors other than supply and demand, there is clearly room for producers and consumers to join force to reduce volatility, through better regulation of the speculative activities, increasing predictability, etc… OPEC has been calling for such joint effort through dialogues with various parties within the oil importing world but also with other oil and gas producers.
There is evidence today that the relatively slow expansion of the petroleum industry over recent years was to a great extent a result of the divestment in human capital over the previous two decades that followed the price collapse of the mid eighties. Industry should meet the challenge of balancing short term benefits of cost cutting, with the long term reward of a strong comparative advantage of investment in human resources, when opportunities are offered by the ever expanding global energy needs.
Algeria, like other petroleum exporting countries, has been actively looking for a shared solution to the common challenges facing oil producing and consuming countries. Hence, as an OPEC member it is an active proponent of dialogue with consumers, and as within the IEF it has been a committed member since its inception.
On the domestic front, Algeria has been for decades promoting the use of environmentally friendly energy carriers such as natural gas and LPG, to replace more polluting fuels. One positive side effect was to free more petroleum for export. For the same long period, Algerian oil industry has invested heavily to reduce flared gas to marginal levels. On the same track, Algeria has developed a major Carbon Capture and Storage (CCS) project in the gas prone region of In Salah, which is one the few such projects worldwide.
More recently, Algeria has launched an ambitious programme to develop the vast potential of its renewable energy sources, particularly solar. A first hybrid gas solar power plant, using the solar thermal technology is under construction and should be followed by others, with the objective of meeting 10% of the electricity need of the country by 2030 through renewable energy.
Apart from contributing to the dialogue and co-operation to meet the current challenge of stabilising oil market, Algeria is committed to implement an energy policy which includes environmental protection and to promote renewable energy sources. Thus, it is looking for co-operation with all stakeholders, including the industry and the research community to achieve its stated targets.
On the eve of our 11th International Energy Forum, we are looking forward to join force with interested parties to explore all avenues for co-operation to secure a sustainable energy path.