IEEJ：February 2020○ｃIEEJ 2020
Special Bulletin
A Japanese Perspective on the International Energy Landscape (468)February 20, 2020

At the 10th IEA-IEF-OPEC Symposium on Energy Outlooks
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn February 19, the 10th IEA-IEF-OPEC Symposium on Energy Outlooks took place at
the headquarters of the International Energy Forum in Riyadh. The annual symposium has been held
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 majorcountries, holding vigorous discussions. This symposium has been designed for the International
Energy Agency representing oil-consuming countries and the Organization of the Petroleum
Exporting Countries representing oil-producing countries to frankly discuss matters of interest tothem as mediated by the IEF established for dialogue between oil-producing and consuming
countries. The latest symposium was the 10th one, symbolizing deepening dialogue between oilproducers and consumers.
On February 18 before the symposium, the IEF-EU Energy Day conference was held at
the IEF headquarters. On February 20, the first IEF-IRENA Seminar on Renewables and Clean
Energy Outlooks took place there. The conference between the IEF and the European Union dealt
with the Green New Deal initiative planned in Europe and the Circular Economy initiative attracting
interest in Saudi Arabia. At the Seminar, the IEF and the International Renewable Energy Agency
discussed renewable and clean energy outlooks, as indicated by the title, under cooperation from theKing Abdullah Petroleum Studies and Research Center, a Saudi energy think tank. In the following, I
would like to summarize impressive points mainly of the IEA-IEF-OPEC symposium.
First, I would like to point out that all energy stakeholders including representatives fromoil-producing and consuming countries indicated their strong interest in their common issues at theirdiscussion. In this sense, the dialogue contrasted with cool discussions on rather technical issues atthe previous annual symposium (see A Japanese Perspective on the International Energy Landscape(468)). Behind the strong interest in such common issues might have been very high uncertainties. A
typical issue was how we should view the impact of the new coronavirus epidemic, the biggest
uncertain factor at present for a short-term outlook on the international energy market. How theexpanding new coronavirus epidemic would affect the Chinese economy was the biggest matter ofinterest to all participants in the symposium. Through discussions at the symposium and my talks
with other participants, I felt that the issue was the biggest matter of concern that was shaking theinternational energy market.
This issue is important because international energy market stakeholders have been
concerned about oversupply, irrespective of the new coronavirus epidemic. The impact of theepidemic has increased pressure on the market. Both IEA and OPEC outlooks forecast that
non-OPEC oil supply would expand far faster than global oil demand in 2020. If oil demand growth
decelerates on an economic slowdown through the new coronavirus epidemic in China that has
driven global oil demand growth, strong downward pressure will be exerted on crude oil prices. On1IEEJ：February 2020○ｃIEEJ 2020
February 10, in fact, the front-month futures contract on the West Texas Intermediate crude oil sankto this year’s up-to-date low of $49.57 per barrel. The oil price fall has taken a pause as speculation
about the OPEC-plus group’s enhancement of joint production cuts has been combined with a fall inLibyan oil production amid its destabilization. Depending on future developments, however,downward pressure on oil prices may grow again. Undoubtedly, future developments regarding thenew coronavirus epidemic were a serious matter of interest to all participants in the symposium.
Some experts at talks with me expected or hoped that the Chinese economy would pick up
in the second quarter of this year after an economic slowdown and an oil demand decline take apause following the peaking of the epidemic in the first quarter. However, no optimism can bewarranted at present. This is because it is difficult to estimate whether China that occupies a key
position in global supply chains for manufacturing would smoothly resume full economic operations
and how private consumption driving China’s economic growth would be affected by the epidemic.
Given that the future course of the expanding epidemic and China’s economic trend exert great
influence on the international energy market, we must be vigilant.
I felt anew that the oil market differs from the liquefied natural gas market, although thedifference was not directly discussed at the symposium. While the existence, functions andeffectiveness of the “supply-demand management system” in the international oil market arecontroversial, the market has OPEC or the OPEC-plus group that serves as a market maker to adjust
production. Saudi Arabia is present in the market as the central player of the oil cartel. However,there is no such presence in the LNG market. If China’s oil demand declines due to the newcoronavirus epidemic, the OPEC-plus group or Saudi Arabia may play a role in supporting oil prices
and stabilizing the oil market. In the absence of such players in the LNG market, even greater
downward pressure may emerge on the market price. As Chinese companies have reportedly
declared force majeure to LNG suppliers, surplus LNG cargoes may exert great downward pressure
on spot LNG prices. We must pay attention to relevant future developments as part of the epidemic’simpact.
Second, the symposium had vigorous discussions on various uncertain factors regarding
long-term issues in the international energy market. As long-term issues, participants discussed
global energy transition challenges and uncertainties amid increasing global interest in climatechange, the future of various relevant energy options, hopes on hydrogen and other innovativetechnologies, the circular carbon economy attracting attention in Saudi Arabia hosting thesymposium, and carbon capture, utilization and storage technologies. Particularly interesting werediscussions in a session on the future of transportation energy, in which I participated as a panelist.
The future of transportation energy is important because the transportation sector’sexpansion is destined to drive global energy demand growth. Given that oil occupies the central
position among transportation energy sources, the future of transportation energy is significant for
the international energy industry including international oil companies. As Asian emerging market
economies drive growth in demand for transportation energy including oil, future energy options in
Asia are destined to have great influence on the future of transportation energy. In this sense, thisissue is a key matter of interest to the world. As factors contributing to great uncertainties about thefuture of demand for transportation energy, participants in the symposium pointed to and vigorously
discussed (1) the direction of changes in power trains such as electric and fuel cell vehicles, (2)potential further improvements in the fuel efficiency of existing internal combustion engine vehicles
and hybrid vehicles, (3) changes in how to use automobiles and in mobility and (4) energy andenvironment policies and consumers’ choices that drive the abovementioned factors. More accurate
2

IEEJ：February 2020○
ｃIEEJ 2020and objective information collection and analysis are indispensable for addressing uncertainties. In
the future, energy dialogue may be required to be promoted globally as an initiative to better respondto energy challenges in the world.

Contact: report@tky.ieej.or.jp
The back issues are available at the following URL
http://eneken.ieej.or.jp/en/special_bulletin.html

3