Opec AddOn

Opec
The OPEC Long-Term Strategy recognises the important role of oil in meeting future global energy demand and for the socio-economic development of OPEC Member Countries, and provides a coherent and consistent vision and framework for the Organization's future.
Key challanges are
Future world economic growth, consuming countrie's policies, and technological developement
The key implications that emerge from these scenarios are described in the following section:
How might oil demand evolve?
Global economic growth is robust in this scenario, but no different to average growth rates observed over the past 15 years.
Oil demand is also greatly affected by consuming countrie's policies. Great uncertainty exists in relation to future developements of consuming countrie's policies and is considered one of the main constraints in ensuring adequate security of demand.
The outlook for oil demand must be seen very much in the context of these uncertainties. Nevertheless, demand growth, subject to the uncertainties outlined and could turn out to be considerably different.

Non-OPEC supply prospects also uncertain
Another major area of uncertainty that impacts the demand for OPEC oil and further complicates making appropriate and timely investments in OPEC countries concerns the developement in non-OPEC supply.
Future technological progress may also lead to the developement of significant amounts of unconventional oil and alternative fuels.

Broad range of future demand for OPEC oil
In meeting the future growth of world oil demand, oil resources are large and sufficient, and oil supply will not peak within the considered timeframe.
This complicates the planning for appropriate and timely investments in OPEC Countries and, consequently, increases the risk associated with under-, as well as over-investment.
A central challenge is associated with the lack of security of demand and the need for adequate flexibility to adapt to a wide range of potential growth in demand for OPEC oil that stems from these great uncertainties over the coming years, particularly given the long lead times involved.

The downstream is also important
It is important to note that the challenge related to making the appropriate investment in the oil industry extends along the entire supply-chain.
The combination of this with the move to ever-stricter product quality and environmental regulations represents a challenge dfor the downstream industry, especially in the context of uncertain demand growth.

Elements of the strategy
"... extreme price levels, either too high or too low, are damaging for both producers and consumers..."
OPEC's Long-Term Strategy covers various issues, such as oil market stability, upstream and downstream investment, technology, the role of OPEC National Oil Companies, multilateral negotiations, in particular those related to trade and the environment, and the important relationships with both producers and consumers, as well as with international oprganisations and institutions.
"... there is a need to support fair and stable prices, sustainability of supply, and security of demand."
"The use of leading indicators to assist in foreseeing economic downturns and upturns that affect oil demand and supply should be a fundamental tool..."
"The timing and size of capacity expansion in Member Countries... should be such that a reasonable level of spare capacity is available."
"...the primary respnsibility for downstream investment remains with major consuming countries and international oil companies."
"OPEC also calls for the promotion of the development of technologies that address climate change concerns. One promising example is that of carbon dioxide capture and storage technology..."
"In OPEC Member Countries, the application of advanced upstream technologies can potentially reduce costs further, increase recovery rates, and open up frontier areas..."
"The international community should fulfil its obbligations to strive to minimise the adverse effects of policies and measure on developing country Parties and, in particular, fossilfuel exporting, developing countries."
"...preconception and missunderstanding... calls for the effective communication of the effective communication of the positive role OPEC plays for the world at large."

Concluding remarks
OPEC will continue to expand its production capacity, both to meet the increased demand for its oil and to offer an adequate level of spare capacity.
At the same time, the important role of oil in the economic developement and social progress of OPEC Member Countries must be recognised.
The issue of security of demand must, therefore, be regarded as an inherent factor in supporting longer-term market stability.
Nevertheless, it is also increasingly recognised that a broader set of conditions are needed for long-term oil market stability. Open, positive, constructive, pragmatic dialogue, with all parties, must constitute the main means of turning the future challenges into opportunities in the new energy era.