There was some dialogue over carbon pricing and, although not a universal agreement, the outcome seemed to be that whatever happened, it had to be applied globally. I assumed they did not want to see different policies in different regions. Furthermore, whatever was received by governments should be ploughed back in to the economies of those countries taking it. The argument of course for a global carbon tax would be to stifle coal’s market share as coal is twice as dirty as gas and whatever tax hits gas, it will be double for coal.
The next session was chaired by Bijan Namdar Zangeneh, the Minister of Petroleum for Iran, and he again said that there must be cooperation between OPEC and non-OPEC producers. Unfortunately for OPEC, the reason why we have the current situation is because non-OPEC producers like the US and Russia and not interested! He wants to see an “equitable” price, but from previous OPEC Meetings, the view was that the level should be over $100 and today that level is simply not supported in the market.
Iran is looking for sanctions to be “lifted” so that it can increase output later in the year. Yet when the Iraqi Minster joined in, he seemed oblivious to the fact that his country was under serious threat from IS, whose forces are now posing a greater threat to Baghdad. So, on the one hand, Iraq has ongoing plans to increase output while on the other, it’s difficult to know how much of that oil will still be under federal control by the end of the year.
We had a very entertaining speech from the Venezuelan Minister, Asdrubal Chavez J, who may be a brother to the late President Hugo Chavez. He almost relived the revolution with the words “Simon Bolivar” and “Hugo Chavez” ringing out in his presentation and complaining of “imperialist intervention” regarding the reaction of Conoco Phillips and Exxon Mobil to the terms over following nationalisation of the industry.
Sadly for him, Venezuela has squandered much of its oil wealth carelessly and not invested in the infrastructure for the future. It has terrific reserves, but will any IOC want to go there to help it extract them while it needs an oil price closer $120 just to stand still. I didn’t feel that his speech gave him any credibility within or outside of OPEC.
India was invited and Minister Dharmendra Pradhan gave another passionate speech to impress upon the audience the extent to which India, the fourth largest energy consumer in the world, will increase consumption in years to come while at the same time also investing in renewables. Growth from the Asia-Pacific Region (APR) is leading the resurgence in energy demand and, therefore, he felt that they should qualify for a “special” deal from OPEC! His problem is that India has little refining capacity and so needs crude at a cheap price.
Dr Aldo Flores-Quiroga, the Secretary General of the International Energy Forum (IEF), wants a clearer understanding between the physical and financial, and greater markets and greater scope for policy and regulation. Much of the world is still locked into the global recession of 2008 and analysing market volatility since then is seeking to understand where the trigger point is. Over the period, 60% has traded at around 5% and a further 15% at a tolerable level but beyond that he feels that there should be a policy response. Traders, he feels, like a high variation range, but what is the tolerable level?
The IEF has its own data plus that from the IEA, OPEC, and JODI and from this attempts to understand the market. Data varies from different sources and he would like to see greater transparency overall but my guess is that there are too many players that would not like this! Some years ago a senior delegate, who I saw again this week, said to me that they had difficulties in understanding some of the “third party” figures quoted and then went on to say likewise, to some of the figures quoted by fellow OPEC members!
