FOR IMMEDIATE RELEASE
CONTACT Kevin McPherson
+1-972-952-9371, e-mail kmcpherson@otcnet.org)
HOUSTON, Texas, U.S.A. (8 May 2002) - Diversification and increased
production output will be the trends for the global oil and gas
industry, according to Amy Myers Jaffe, Senior Energy Advisor for
James A. Baker III Institute for Public Policy. Jaffe spoke during
Wednesday's Industry Breakfast at the 2002 Offshore Technology Conference.
The breakfast, "Geopolitics of Oil and Gas and Its Influence on
Prices Into the 21st Century," broke down the different
factors influencing the global market and the individual countries
that will be major players. Jaffe analyzed the current production
figures and the popular future industry predictions.
Iran, Iraq, Syria, Sudan, and Libya have the capacity to produce
more than 10% of the world's supplies, she said. These Middle Eastern
countries also have been facing more scrutiny from the U.S. and
Capitol Hill post September 11.
Jaffe focused on Saudi Arabia, stating that it has become a high
priority for the country to maintain its position as the top U.S.
supplier and as a key supplier to the growing Asian market. It also
will be important for Saudi Arabia to keep oil policy on a separate
track from diplomatic and political activities as they continue
to worry about competition from rising investment in Russia, Canada,
Africa, and Iran, she said.
The U.S. is increasingly scrutinizing Saudi Arabia as well and
whether the country will be a reliable ally in the future, she said.
The relationship between Saudi Arabia and the U.S. is currently
strong enough to continue because Saudi needs access to the U.S.
market and capital, and there are few secure alternatives. U.S.
does not have ready substitutes for Saudi oil, the U.S. depends
on the country's airspace use, and the U.S. cannot afford to lose
Saudi's investment in the U.S. markets.
Other long-term trends, according to Jaffe, include an increase
of importation to China from the Mideast and Africa, the U.S. increasing
reliance on African supplies, an increased importance of Russian
supplies to Europe and Asia, and a change in Iraq. The change in
Iraq could signify renewed competition in OPEC, a reopening to IOC
investment, and an easing of sanctions, she said.
At the same time, Jaffe said, the United States will remain an
important market to OPEC. Compared with the Asia-Pacific, the U.S.
has supplied a competitive share of world oil demand between 1991
and 2000, therefore, OPEC needs to concern itself with U.S. opinion.
Russia will continue to compete with Saudi Arabia for the Japanese
and Chinese markets. Jaffe predicted that increased interaction
between Russia and the United States will lead to partnerships,
which the countries will use to enter Iraq and to penetrate the
market.
The Canadian oil sands will begin to emerge as a competitive resource
because production costs are significantly decreasing with the use
of innovative technologies. "I think I'll be at OTC in the next
few years discussing the amazing growth in Canada," Jaffe stated.
She emphasized the importance of the forum that the Offshore Technology
Conference continues to provide for new technologies and innovations
in the industry. What seemed impossibilities in the past become
realities through the combined efforts of industry leading companies
sharing ideas and technologies year after year at OTC. "Exploration
of the Arctic doesn't seem as far away as it did when I came to
OTC for the first time in 1990," Jaffe said.
Founded in 1969, the Offshore Technology Conference is the
world's foremost event for the development of offshore resources
in the fields of drilling, exploration, production and environmental
protection. OTC is held annually in May at Reliant Center at Reliant
Park in Houston. For more information, visit the OTC 2002 Web site
at www.OTCnet.org.
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