“No Country Today Can Fully be Energy Independent”

As OPEC’s Secretary General Abdalla Salem El-Badri has a bird’s eyeview of the world’s oil supplies. Business Today’s Anilesh S. Mahajan reached out to him for his views on the growing discoveries of shale gas and oil sands around the world, and the projections that the US could be energy independent in the coming decades. Edited excerpts from the email interview:

With North America potentially becoming self-dependent for its energy needs, how does OPEC sees the market for oil and gas changing globally?

We at OPEC recognise that shale oil and gas hold great promise. In fact, a number of OPEC’s member countries have significant resources in this regard. We see it as part of a diverse energy mix – something we have always welcomed. However, the challenges associated with the environmental impact of hydraulic fracturing still remain, especially on groundwater supplies. While tech- nology will eventually help solve some of these problems, it will take time. It is also important to highlight the fact that the US still needs to overcome bottlenecks in its domestic oil transportation systems.

In terms of North American energy independence, however, I think at the moment we cannot say more than ‘let’s wait and see’. And I would like to add the simple fact that no country today can fully be energy independent. This is not the world we live in.

Do you see developments in the US having an impact on the pricing of oil and gas?

I cannot make predictions on what may or may not impact prices. What I can say is that OPEC has no price target. Our priority is striving for a stable price: at a level that allows producers to receive a decent income and to invest to meet future demand, and at the same time, does not affect global economic growth.

I think it is important to highlight the break-even prices for all energies. Obviously these vary and prices that are too low may see some developments put on hold or stopped altogether because they are deemed uneconomic. This happened at the end of 2008 when prices fell to just above$30 per barrel. In turn, prices that are too low may ‘sow the seeds’ of high prices in the future if investments are not made.

In the next five years, we expect emerging markets, such as China and India, to be the main drivers of increased energy demand. How is OPEC reacting to this?

In terms of the Middle East and the Asia Pacific regions, crude oil exports from the former to the latter are expected to increase by six million barrels per day between 2011 and 2035. The projected trend over this time period is for a re-direction of crude oil exports from Europe, and the region of the US and Canada, to the growing markets of the Asia Pacific.