On the oil market and prices

‘First of all, looking at the market fundamentals for the next couple of years, they are unfortunately very tight. And there are three reasons why it is tight. First, we do not see enough oil supply coming to the market. We expect more from key Middle East countries such as Saudi Arabia, Iran and Kuwait. Second, downstream activities to transform this oil into products are also lagging. The third reason is demand. Even though it is not as strong as in 2004, it is still growing and it will continue to grow. These three factors will put markets in a very tight balance and leave very little room for spare capacity in production and refining. Therefore it would be a very big surprise if prices were to go down from the levels that we have come used to see.

How far prices will go up mainly depends on geopolitical events. For example, we are seeing some producing countries pushing oil and gas in favour of their foreign policy. If this trend continues, if there is another geopolitical threat or even if there is something like a hurricane, this may well mean prices at higher levels, especially in the absence of spare capacity. That’s how I see the next couple of years.

On Russia

Russia is a very important energy country. It has been a reliable supplier for 30 years. But the Russia-Ukraine gas dispute was a big surprise for us and perhaps an eye opener for many in Europe. For us, the key question is whether Russia, especially Gazprom, will make investments in the gas business in a timely manner in order to meet the demand of its clients.

On Middle East producers

Saudi Arabia is investing but the current investment plans are not enough to comfort the markets, especially in the absence of investments from other countries. We would like to see more oil coming from Iran. But Iran is different from Saudi Arabia; it does not have the domestic capital to invest. In the case of Iran, it needs foreign investment in order to increase production capacity. But in the current political context, this may prove to be difficult. The third country, which is very important, is Iraq. It has huge reserves, cheap reserves and easy geology. But in the absence of order and security, establishing production in Iraq in the medium term will be difficult.

On downstream bottlenecks

According to our projections, between now and 2030, $480,000 million will be needed for downstream investments – $20,000 million a year. But there is an important difference between the upstream and the downstream investments. You can build a refinery in China, in India, everywhere. But upstream investments have to be made where the oil is.

Refining lagging behind is an important question and both OPEC and the IEA member countries have to push it forward. I am not exempting the IEA countries from the need to invest. We are telling governments to find the right framework and to increase the incentives. And, of course, OPEC countries do this as well. But for oil production you need an oil reservoir. Therefore, the responsibility is with the key major producing nations. There is an important difference there.

On the role of NOCs and IOCs

I think this is the key question The world is not running out of oil but the international oil companies (IOCs) are.

There is a lot of ownership with the national oil companies (NOCs). In most countries in the Middle East or Latin America, they don’t want IOCs to become involved in upstream investments and in many cases they don’t need the IOCs’ money either.

I think it is now about the IOCs’