IEEJ：July ©IEEJ 2023
Special Bulletin
A Japanese Perspective on the International Energy Landscape (644)

July 7, 2023

8th OPEC International Seminar and OPEC AwardKen Koyama, PhD
Chief Economist, Senior Managing Director
The Institute of Energy Economics, JapanOn July 5 and 6, the 8th OPEC International Seminar took place in a magnificent
international conference hall at the Hofburg Royal Palace in Vienna. This seminar had been heldaround every three years until the 7th one in 2018. Due to the COVID-19 pandemic and other factors,
however, the 8th seminar was the first one in five years. The seminar included opening speeches byHaitham Al Ghais, secretary general of the Organization of the Petroleum Exporting Countries, andAntonio Oburu Ondo, president of the OPEC Conference in 2023 and Equatorial Guinea’s ministerof mines and hydrocarbons, followed by a special session of Saudi Arabian Energy Minister
Abdulaziz bin Salman Al Saud, four ministerial sessions and six high-level roundtables. The
conference organizers estimated the number of participants in the seminar at about 1,000 including
ministers from OPEC and non-OPEC members of the OPEC-plus group of oil-producing countries,
representatives from energy-related international organizations, top management officials frominternational and national oil companies and world-renowned energy experts. They conducted livelyand heated discussions.
In addition, an OPEC award presentation ceremony came at a gala dinner for the seminaron the evening of July 5. For the ceremony, OPEC introduced three new awards – the OPEC Awardfor the Best Energy Research Institute, OPEC Award for the Best Energy Research Paper, and OPEC
Award for the Best Young Energy Professional – on top of the traditional OPEC Awards forJournalism and for Research and announced the winners of these awards. I was extremely honored toreceive the OPEC Award for Research. In the following, I would like to summarize the important
points that I felt at the OPEC seminar, instead of introducing the details of the seminar, and briefly
comment on the OPEC Award.
First, I had an impression that OPEC or OPEC-plus oil-producing countries are acutely
aware of their influence and their presence and importance in the global energy market, even in theface of various challenges and uncertainties about the future. Crude oil prices have fallen sharply
from last year's peak above $130 per barrel to less than $80/bbl. The key West Texas Intermediate
crude price slipped below $70/bbl sometimes. Factors that have pushed crude oil prices downward
include a global economic slowdown caused by interest rate hikes and financial instability in Europeand the United States and by the stagnation of the Chinese economy, which has driven global oil
demand growth in the past decades. Even when OPEC-plus production cuts responding to weak
crude oil prices and voluntary additional production cuts by Russia and Saudi Arabia wereannounced, crude oil prices failed to rebound significantly, remaining in the $70-80/bbl range. In thissense, OPEC or OPEC-plus influence has not been positioned to visibly push up crude oil prices.
At the seminar, however, many remarks led me to feel that OPEC-plus oil-producing
countries are confident that their coordinated production cuts, voluntary production cuts by some ofthem and messages sent through such actions to the international oil market play an extremely
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important role in stabilizing crude oil prices. They seemingly believe that their presence holds thekey to international oil market stabilization. While it is natural for the international oil market tohave uncertainties, oil-producing countries seem to keenly recognize the importance of enhancing
the clarity of the market outlook as much as possible and having a presence that can implement theenhancement. At a time when the strategic value of surplus oil production capacity to respond to
unforeseen developments amid uncertainties is increasing due to the growing importance of energy
security and stable energy supply and Western countries’ urgent challenge to phase out dependence
on Russia in the midst of the Ukraine crisis, the influence and presence of Middle East Gulf oilproducers, especially Saudi Arabia, have grown significantly. In this way, it seems that theseoil-producing countries fully understand that the world recognizes these countries as sitting in thedriver’s seat for the world oil market.
While feeling that oil-producing countries have become more aware of their own influence,
I got the impression that they have grown interested in the effects of financial markets andspeculative transactions and are conscious of checking the effects. I felt that oil-producing countries'
growing interest in the impact of financial factors on oil prices at present is as remarkable as it wasduring crude oil price spikes in 2008. Recently, messages that oil-producing countries have been
trying to send to the market have indicated that they have strongly been aware of financial factors. Inaddition to financial factors, the future response of OPEC oil producers, especially Saudi Arabia,
will be closely watched, including the impacts of the ongoing production cuts on actual supply anddemand in the international oil market in the second half of 2023 and beyond.
The second important point that I felt was that the awareness of the importance of oil,natural gas and LNG has strengthened. I also felt that the attitude of clearly speaking out theimportance has been restored or strengthened. As a matter of course, however, headwinds against
fossil fuels continue to exist even today or are likely to intensify in the midst of the trend toward
strengthening decarbonization efforts to achieve carbon neutrality. The future of oil, natural gas andLNG has not necessarily become optimistic at all. Due to the Ukraine crisis, however, a stableenergy supply has become an urgent and most important issue. The importance of securing a stablesupply of fossil fuels as the current main energy source has been strongly recognized. In addition,
there is a growing view that oil, natural gas and LNG will inevitably play an important role in thelong transitional period towards carbon neutrality, even if efforts are to be strengthened to achievecarbon neutrality as a long-term goal. In response to these trends, the world of finance and the toneof mass media are changing. In light of these changes, I felt that hesitancy about speaking out about
the importance of fossil fuels including oil, natural gas and LNG clearly has been diminishing in theSeminar.
In talks with my acquaintances who participated in the seminar, I described the situation asindicating that "fossil fuel strikes back" and got their consent and agreement for the description.
Some saw my description as indicating an interesting view. Given that the seminar was hosted by
OPEC and was held at the home ground of oil, natural gas and LNG, it goes without saying that suchreaction to my view should be discounted. However, I felt that oil and gas stakeholders’ future
prospects and their sense of insecurity have changed significantly from two years ago. If the futureenergy transition is promoted through various paths, with pragmatic initiatives being emphasized,
discussions on fossil fuels may indicate new developments and undergo new impacts.
Finally, I would like to make a brief comment about the OPEC Award. It was an incredible
honor and pleasure for me to win the OPEC Award for Research. This is because I knew this award
and its past winners very well. The past six winners, including Professor Robert Mabro (1st, 2004)
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and Professor Paul Stevens (3rd, 2009), are world-renowned experts who can be called legends inthis field. They are all pioneers, and some are my former teachers/supervisor. I have the feeling of
being inspired by the award. I take this prestigious award as giving me an opportunity to renew mybelief that I must improve myself further.
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