TWENTIETH World Petroleum Congress kicks off in the Qatari capital of Doha this week, aiming to boost dialogue among stakeholders in the petroleum industry and beyond. It is the first time the triennial event has ever been held in the Middle East. It could not have come to the region at a more crucial time.
The momentum of the Arab Spring still engulfs the region, and disruptions in oil supply became very real in Libya. Regardless of how swift a return to pre-conflict levels of production will be, doubts about Opec’s spare capacity in particular have exacerbated supply concerns.
With Syria entrenched in de-facto civil war, and Western powers ramping up the rhetoric on Iran, the prospect of a broader regional conflict has many investors concerned about where oil prices, now above $100 a barrel, are headed. The Middle East is home to many of Opec’s heavyweights and the Strait of Hormuz, a critical chokepoint. More than 15m barrels per day of crude oil go through the waterway, some 17 per cent of the world’s oil demand.
A multitude of issues will be discussed over the course of the five day event here in Doha. Topics such as the impact of conflict and territorial disputes, to what constitutes a fair price for oil and gas are on the agenda.
Most Opec members, especially in the Gulf, shy away from endorsing levels above $100 per barrel out of fear of demand destruction and a global economy still struggling to stay on its feet.
Energy demand though remains elevated with the IEA forecasting global oil demand to grow by 1.3m barrels per day in 2012.
So attracting investments for the industry in such a climate raises the stakes for various players ranging from state-owned oil groups to the major independent oil companies. And as much as fossil fuels may continue to dominate the world’s energy mix or a few years to come, dialogue in Doha will also focus on the alternative sources of energy.
Qatar is the world’s biggest natural gas exporter, and also boasts one of the fastest growing economies. The IMF forecasts 2011 GDP growth at 18.7 per cent. Unlike several of its Arab counterparts, Qatar has been able to avoid domestic turmoil. The country, rated AA by credit rating agencies, successfully raised $5bn recently in its first sovereign bond issue in two years.
The hope in Doha therefore is that the dialogue between the energy industry’s biggest players will translate into a more streamlined and coordinated response to the fragile economic and geopolitical realities. At the very least, it’s hoped the Congress will be a step in that direction.
Yousef Gamal El-Din is Middle East Correspondent for CNBC. Follow him on Twitter @youseftv