IEEJ：March 2019○ｃIEEJ 2019
Special Bulletin
A Japanese Perspective on the International Energy Landscape (417)March 1, 2019

At the 9th IEA-IEF-OPEC Symposium on Energy Outlooks
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn February 27, the ninth IEA-IEF-OPEC Symposium on Energy Outlooks took place inthe Saudi Arabian capital of Riyadh. Since the first one in January 2011, the symposium has beenannually held in Riyadh as part of dialogue between oil producing and consuming countries. At thelatest symposium, representatives from the three sponsoring international organizations, government
officials from major countries, energy industry stakeholders and experts vigorously discussed short-,
medium- and long-term global energy outlooks under the Chatham House Rules. For the backgroundof the symposium’s inauguration and discussions at the initial stage, see the 28th, 118th and 157th
issues of “A Japanese Perspective on the International Energy Landscape.” The symposium wasinaugurated as a forum between the International Energy Agency representing oil consuming
countries and the Organization of the Petroleum Exporting Countries representing oil producing
countries as mediated by the International Energy Forum, created for dialogue between oil producing
and consuming countries. It is designed for the IEA and OPEC to open their respective energy
outlooks and discuss them frankly from various angles along with other participants for the grandpurpose of stabilizing the international energy market. Through the nine symposiums, dialogue
between oil producing and consuming countries have deepened. I attended the first, third and fourthones before participating in the latest one after a lapse of five years in which I had schedulingconflicts.
On February 28, the fifth IEF-KAPSARC Thought Leaders’ Roundtable was opened at theIEF headquarters. As at the IEA-IEF-OPEC symposium on the previous day, representatives frominternational energy organizations, government officials, industry stakeholders and experts took partin the meeting cosponsored by the IEF and the King Abdullah Petroleum Studies and ResearchCenter (KAPSARC), a Saudi Arabian energy think tank, discussing the theme titled “Sustainable andCompetitive Energy Supply: the Role of Efficiency and Innovation” under the Chatham House Rules.
In the following, I would like to make comments on impressive points at the two meetings.
First, the frankest impression of the IEA-IEF-OPEC symposium was that the meeting has
deepened as a forum for technical discussions on energy outlooks. In the first few meetings in which
I participated in the past, representatives from oil producing and consuming countries clashed or had
heated debates based on their respective positions. A frequently quoted opinion was that thesymposium was designed for oil producing and consuming countries to overcome their clash tocontinue dialogue by focusing on technical discussions about energy outlooks. At the latest meeting I
attended after the long lapse, I felt that the symposium has gone in the initially planned direction,
realizing vigorous but cool discussions between experts.
As for short-term oil market outlooks, the IEA forecast global oil demand in 2019 asrelatively robust, while OPEC gave a relatively prudent prediction. Both predicted substantial
growth in non-OPEC oil supply in 2019. However, OPEC forecast an even faster increase than an1

IEEJ：March 2019○ｃIEEJ 2019IEA-projected rise. The forecast call on OPEC, or demand for OPEC crude oil required to achieve asupply-demand equilibrium in the international market, was lowered by 0.1 million barrels per barrel
from 38.8 million bpd for 2018 to 38.7 million bpd for 2019 by the IEA and 0.9 million bpd from thesame level to 37.9 million bpd by OPEC. The greater cut by OPEC in the forecast call on OPEC wasinteresting, indicating that OPEC is more cautious about the future international oil market and oilprices.
It may be needless to note that longer-term energy market outlooks are exposed to more
uncertainties. At the latest symposium, various interesting arguments were made about the impactsof climate change and energy policies, the impacts of technological innovation and the future courseof the shale revolution. How the future picture of fossil fuels would change amid energy transitionand how oil and gas would be positioned amid the transition were a grave matter of interest for oil
producing county and energy industry stakeholders who attended the symposium. In this respect,arguments were made about the peak oil demand problem. Various views were given about thefuture course and effects of an electric vehicle boom since 2018. While electric vehicles are
predicted to substantially diffuse, views are divided on whether the diffusion’s impact would be great
enough to reduce global oil demand. Factors exerting influence on demand for oil for vehicles alone
are numerous, including not only power train changes but also automatic driving, ride-share and car
sharing practices, changes in the whole picture of mobility and fuel efficiency improvements forinternal combustion engine vehicles. I felt that when oil demand will peak or how fast oil demand
will decline after peaking would be more important than whether oil demand will peak or not. Evenin a world where oil demand will peak, we should remember that massive oil will still be required in
the world and that it will be important to secure investment in oil supply to meet the demand.
Both the IEA and OPEC in their long-term outlooks predicted that shale oil production
would peak in the second half of the 2020s. Whether shale oil production would peak is also a matterof great concern to them. Only a decade has passed since the shale revolution started. All
stakeholders are still learning about the impact of the revolution. Whether and when U.S. shale oil
production will peak will exert great influence on the future course of the international oil market
and the United States’ energy dominance. After predicting U.S. oil production to moderately expand
over a long term, the U.S. Energy Information Administration in its latest outlook forecast that U.S.
shale oil production will peak and decrease moderately in a reference scenario. The outlook for peak
production of shale oil might have stemmed from a too rapid increase in production in the past
several years. It will be important to follow up on shale oil production trend.
At the IEF-KAPSARC Roundtable, very interesting arguments were made about thepursuit of greater efficiency and the roles of innovation in oil and gas industry value chains.
Particularly impressive for me were growing arguments about and rising interests in hydrogen.
While we see new trends such as the electrification of vehicles, a run-up to a possible oil demand
peak and growing needs for low-carbon gas under the enhancement of climate change
countermeasures in Europe, a growing matter of concern is that existing oil and gas resources could
become unburnable over a long term. Amid such concern, the utilization of CO2-free hydrogen has
attracted attention as one of the approaches that contribute to energy security and fundamental
decarbonization. CO2-free hydrogen can be made not only from renewable energy but also fromfossil fuels combined with carbon capture and storage technology. At the Roundtable, numerouspresentations and vigorous arguments were made about such hydrogen utilization as a way tobalance the effective utilization of fossil fuel resources with decarbonization. As a matter of course,
numerous technological, economic and social hurdles exist against the development of a CO2-free2

IEEJ：March 2019○ｃIEEJ 2019hydrogen society. A long period of time will be required to overcome these hurdles. Interestingly,
Roundtable participants noted that international and government-industry cooperation would beimportant for promoting CO2-free hydrogen and pointed to the significance of last year’s ministerial
meeting on hydrogen and of international discussions on hydrogen and relevant cooperation towarda Group of 20 summit this year. Impressively, it was pointed out that persistent initiatives based onlong-term viewpoints and integrated strategies and policies would be significant for climate change
countermeasures and energy security.

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