IEEJ：February ©IEEJ 2023
Special Bulletin
A Japanese Perspective on the International Energy Landscape (624)February 16, 2023

At the 13th IEA-IEF-OPEC Symposium on Energy Outlooks
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn February 15, the 13th IEA-IEF-OPEC Symposium on Energy Outlooks took place at theheadquarters of the International Energy Forum in Riyadh. The annual symposium has been held in
the Saudi Arabian capital since the first one in 2011 for dialogue between oil producing and consuming
countries. Representatives of the three international organizations named in the title participated in thesymposium along with government officials, energy industry people and experts from major countries,
holding vigorous discussions on short to long-term global energy outlooks. This symposium has been
designed for the International Energy Agency, representing oil consuming countries, and theOrganization of the Petroleum Exporting Countries, representing oil producing countries, to frankly
discuss matters of interest to them as mediated by the IEF, established for promoting dialogue between
oil producing and consuming countries.
I participated in the 12th symposium last year and summarized discussions there in an article
titled “A Japanese Perspective on the International Energy Landscape (572).” As one year has passed
since the previous symposium, I felt that dramatic changes in the international energy market under
the Ukraine crisis, which came just after the previous symposium, exerted a great influence on
discussions at the latest symposium. As the international energy market experienced a great turbulence
and was exposed to price spikes and destabilization, energy security became the world’s top priorityin a manner to symbolize the dramatic changes. Under the dramatic changes, it has been strongly
recognized again that energy security and stable energy supply at affordable prices have become anurgent challenge. Amid the recognition, what initiatives the world should promote during the longterm energy transition towards decarbonization was put into question at the symposium. In thefollowing, I would like to make comments on particularly impressive points from the symposium.
In Session I of the symposium, OPEC and IEA representatives made presentations on theirrespective energy outlooks. Then, the IEF reported an analysis comparing various energy outlooks(scenarios) including the IEA and OPEC outlooks, setting the stage for discussing prospects for theinternational energy market. Although the presentations and discussions in the session took up various
medium to long-term challenges, Sessions 2 and 3 dealt with these challenges. In the following, Idiscuss mainly short-term international energy market problems. An important point is that theinternational energy market is plagued with great uncertainties even over the short term. It was pointed
out that the entire global economic trend would attract attention. In particular, China’s economic anddemand trends were predicted to have a great influence on the market supply-demand balance.
Although China’s oil demand trend was highlighted as the center of the uncertainties, Chinese trends
are factors to greatly move the supply-demand balance and prices for natural gas, LNG and coal aswell. As nobody from China participated in the symposium, I strongly felt an imbalance between
growing interests in Chinese trends and China’s recent absence from international discussions.
On the supply side, uncertainties over Russia were taken up as a major issue. Many outlooks
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predict that Russian oil supply will follow a downtrend in 2023 in response to Western sanctions.
However, how much Russian oil supply will decline is uncertain. This is the same case with natural
gas and coal supply. A Russian supply downtrend is an important issue that will affect the internationalenergy market over the short term from 2023. While energy production in major energy supplying
countries other than Russia and unexpected supply disruptions are unignorable issues, discussions in
Session I basically indicated that the world’s dependence on OPEC and the Middle East for energy
supply will increase. In this sense, OPEC or OPEC-plus policy trends and the Middle Eastern situation
are important factors for watching the international energy market.
Session II, titled “Medium Term Perspectives,” dealt with medium-term energy market
challenges. While various problems were taken up, I thought that the most important problem was
how to secure necessary investment. This is because whether supply could be secured in response to
the expected robust demand for fossil fuels such as oil and gas over the medium term holds the key tomarket stabilization. In the session, some noted that an oil demand peak would be far away. As natural
gas demand is expected to be more robust than oil demand, investment shortages are likely to trigger
serious problems. This is because existing oil and gas fields are basically destined to see natural
production depletion. Given that large-scale investment is required only to make up for the natural
production depletion, the significance of investment becomes clearer.
Energy investment has decreased substantially due to an energy demand decline and pricedrops under the COVID-19 crisis and their serious impact on energy companies’ earnings, resulting inunderinvestment in the energy industry. As ESG (environment, society and governance) investment
expansion was combined with the underinvestment, the supply-demand balance tightened on a demand
recovery in 2021. Under the structural underinvestment, the impact of enhanced decarbonization
initiatives on fossil fuel investment has become extremely significant. The future course of Russian
fossil fuel supply that shakes the world under the current energy crisis is also an important problem
regarding the future market stabilization. This is because investment is required in additional energy
supply to make up for a decline in Russian supply. Although high energy prices and the enhanced
recognition of the importance of market stabilization have led to an uptrend in fossil fuel investment,
how to secure necessary investment may become the biggest issue to influence the medium to longterm fate of the international energy market.
Session III, titled “Long Term Perspectives,” dealt with long-term challenges for theinternational energy market and future energy transition. I took part in the final session as one of thepanelists. In the session, it was reaffirmed that there are various scenarios for the overall energy trend,each energy source, and CO2 emissions towards the world’s energy transition, indicating widelydifferent pictures of the energy situation and great uncertainties for 2050. Speakers pointed out that
great difficulties and risks regarding the march towards a single future picture should be fully
appreciated and that it would be important to build on realities.
Given that energy resources endowment, energy supply and demand, economic andindustrial structure, income levels and technological development differ by country, some symposium
participants argued that it is important to be conscious of pragmatism and take an inclusive, holistic
approach to promote long-term energy transition and strike a balance between energy security
enhancement and decarbonization. In consideration of the critical mineral issue, I pointed out thatwhen attempting to minimize energy transition costs, we should consider minimizing and optimizing
overall costs, including not only power generation costs but also costs for integrating intermittent
renewable energy power sources into the grid (including costs for the selection of various technology
options), and economic and energy security costs accompanying dependence on some supply sources
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for strategic materials. In concluding these extremely interesting arguments, symposium participants
reaffirmed the importance of constructive dialogue towards resolving energy problems. An impressive
message from the symposium was that one-way monologue cannot resolve problems.

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