With Asia expected to contribute some 70% of global demand growth in the coming years, OPEC Secretary General Mohammed Barkindo on Monday said his organization welcomes more opportunities to engage with buyers from the region.
In a recorded video address to the APPEC conference in Singapore, Barkindo projected that crude exports from the Middle East to Asia would rise from 14.5 million b/d in 2016 to 22 million b/d in 2040.
"Expansion at these levels from the fast-growing economies in Asia will require supplies from all producing regions and OPEC member countries will surely play an important part in helping meet these increasing needs," he said from the OPEC secretariat in Vienna. "For the foreseeable future, we can count on the Asia-Pacific [region] to be the primary outlet for OPEC and Middle Eastern export barrels."
But OPEC is facing stiff competition from the US, with an official from China's Unipec saying at the conference that the Americas, in particular the US, were positioned to displace the Middle East as the top supplier to Asia.
Middle East producing countries are building more domestic refineries and will have less crude to export, said Wang Pei, Unipec's deputy general manager of research and strategy. Meanwhile, Chinese refineries have imported 36 million barrels of US crude this year through August 2017, compared with 8.5 million barrels for all of 2016.
Canada, Mexico and Brazil also have significant resource bases that Asian refiners are very interested in, along with extra heavy oil from OPEC member Venezuela, she added.
"We can find abundant resources in the Americas," Wang said. "That's why they have great position to become the next major supplier for Asia."
arkindo highlighted the annual OPEC-India Dialogue that was launched in May in Vienna, with the next meeting to be held in New Delhi in 2018. He noted that OPEC members provide 85% of India's crude oil and 90% of its gas.
A similar OPEC-China Dialogue will be held in Beijing later this year, he said.
"These energy dialogue initiatives have set a very positive precedent for future dialogue between OPEC and its Asian partners," Barkindo said. "Our hope is that these efforts will evolve into long-term partnerships that will bring benefits to all stakeholders."
He touted OPEC's efforts to rebalance the market through supply cuts it has instituted with 10 non-OPEC producers, led by Russia. The deal, which began January 1, calls for cutting a combined 1.8 million b/d through March 2018.
Barkindo credited it with helping stabilize prices -- to the benefit of not only producing countries, but also consuming countries, as a more stable market means a better investment environment for upstream projects that will be needed to meet future demand.
"I assure you that if it were not for this noble joint intervention, that began last year, the global oil market would not be where it is today," he said. "Now, looking ahead, we will keep pressing ahead with our efforts until we reach our goal of a fully balanced and growing, sustainable global oil market and industry."
He called on Asia to support OPEC's efforts to manage the market, though he did not mention Indonesia, which suspended its membership last November as it was unwilling to participate in the production cut agreement.
"We must see all stakeholders in the industry rally to ... ensure that prices are stabilized and supported for the long-term, as this will be the only way we can restore investment to the required levels again," Barkindo said. - Platts -