‘Low oil prices provide opportunity for structural reforms’

crude oil sirdle flickrLow oil prices have been a prominent feature of the market since the second half of 2014, posing challenges to the industry. (Image Source: Sirdle/FLICKR)Senior ministers from Kuwait and Iraq, as well as executives from some of the region’s leading energy companies, met in Kuwait last week to discuss the challenges facing the global energy sector

The conference which was held at Sheraton hotel in Kuwait City attracted over 300 delegates from 20 different countries, including Japan, Indonesia and the USA.

2016 has seen a period of significant volatility in the oil market, with prices falling to 13-year lows earlier in January this year.

One of the key areas discussed was the role of OPEC and the necessity for oil-producing nations to work together to reduce volatility. In particular, speakers focused on how the market will be able to manage the return of Iranian oil to the market, after the removal of sanctions, as well as the continuing disruptive impact of shale, gas and renewables.

KPC deputy chairman and chief executive officer Nizar Al-Adsani said, “Mature producing fields globally have an average decline rate of around five per cent, while world oil demand will continue to expand at a range of 1-1.5mn bpd annually, which means that the world markets would need some 5-6mn bpd of new crude annually. This shows the importance of continuity of investments in the upstream globally for the sake of stable markets, and to avoid volatility as well as spikes in oil prices.”

He added that despite the challenges that the current low oil prices pose to the industry, they also provide an opportunity for structural reforms to help achieve long-term goals.

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