The fourth session of the Valdai Club Middle East Conference, “The Future of OPEC and the Prospects of World Hydrocarbon Markets,” was devoted to the future of OPEC and the prospects for global hydrocarbon markets. According to the participants of the session, the organization is unlikely to be able to regain the amount of control it had over the oil market during the “golden age” of its influence. But this also serves as an incentive for oil-producing countries to search for new forms of cooperation in order to stabilize oil prices.
Oil and gas market experts from Russia, the Middle East, and the European Union avoided big statements and were extremely cautious in their forecasts. This is not surprising, given the shocks the energy market has experienced in the past decade. One thing is clear: hydrocarbons continue to play a key role in the global economy, and despite the relative growth of renewable energy in the global energy mix, the transition to green energy is not going as fast as its supporters would like.
According to one speaker, this is largely due to the fact that any changes in the global energy sector’s structure require huge investments, and even the most developed countries are not ready for this. In turn, some “green” initiatives – such as the spread of electric cars – require an energy generation increase, even if they result in less consumption of hydrocarbon fuels.
It is important to note that the economies of China, India and sub-Saharan Africa continue to depend largely on coal. This leads to a comparatively high increase of greenhouse gas emissions. Obviously, the 2015 Paris Agreement on Climate Change does not work and should be revised, as one expert said. On the agenda is the question of how to reconcile the fight against climate change with global development goals and attempts to reduce "energy poverty". No decisive answers were given.
Under these conditions, the debates continue over the possibilities of OPEC. It is obvious that the organization can no longer play a dominant role in the energy market. Currently, the share of OPEC countries in world oil production is 41% and, according to data provided by one of the speakers, by 2040 it could grow to 46%. However, this is not enough for the OPEC countries to guarantee the stability of the global energy market alone. The time has come to create a new international institution that will include other key players, primarily the United States and Russia. It is noteworthy that if the share of the United States and Canada in global oil production grows (from 32% in 2016 to 37% in 2040), then the share of Russia is expected to fall from 20% in 2016 to 18% by 2025 and will remain at this level until 2040.
In general, all participants agreed on the need to create multilateral mechanisms to avoid price shocks in the oil market. One of the speakers said that energy prices should be fair. In other words, the return on the energy sale in the world market should be enough not only to finance the development in energy-producing countries, but also production and expanded reproduction of energy, since this will stimulate the expanded reproduction of the world GDP.
