Strong greenback offering challenges to oil producers: Bahrain Minister

TDT | Manama

The Daily Tribune – www.newsofbahrain.com

Staff Reporter

Strong and rising US dollar is offering a new set of challenges to all major oil producing nations and oil markets, said Bahrain Oil Minster Shaikh Mohammed bin Khalifa Al Khalifa yesterday. This came as he inaugurated the 29th Middle East Petroleum and Gas Conference (MPGC) at Four Seasons Hotel Bahrain Bay. “Certainly, oil prices have increased but we must also acknowledge that commodity prices have skyrocketed during the same period. When we compare the rise in price of oil to that of other commodities, we can understand that the price has remained stable to a large extent.”

He said the significance of oil among all commodities is underpinned by the concept that a barrel of oil is the result of four years of labour and “this is the magic of oil”. The minister pointed out that supply constraints and logistics along with environmental issues are also among the challenges. “However, the biggest timely challenge is the rising US dollar as foreign exchange is the most dynamic decider when it comes to what happens next.” Speaking at the event, His Royal Highness Prince Abdulaziz bin Salman, Minister of Energy for Saudi Arabia, said there are huge opportunities for investments in the refining sector in the coming years.

“Refining capacity shortages are causing refining margins to reach record highs. There has to be a lot of investments in the refining sector to address possible shortages in the future.” Dismissing worries over rising oil prices, HRH Prince Abdulaziz said oil has remained stable when compared to other energy sources virtually in all markets. Iraq Oil Minister Ihsan Abdul Jabbar Ismaael said his country is open to new investments in the oil and gas sector.

“Iraq’s oil sector is rebounding with many new projects on the horizon.” During the MPGC 2022 Annual Crystal Ball session, FGE Chairman Dr Fereidun Fesharaki highlighted ‘Ten Commandments for Oil and Gas’. They include; 1) The Ukraine invasion tightened an already tight oil market 2) Self-sanctioning is causing barrels to find new homes 3) Opec + spare capacity is moving towards 2 mmb/d. 4) Iran can quickly bring in some 1.5 mmb/d if or when a deal happens 5) The US “underinvestment” story is overstated 6) Talk of a pre-COVID peak in oil demand in 2019 was nonsense… oil demand will grow 8mmb/d between 2022-2030, before slowing 7) Looking long-term, plan on US$70/bbl real oil price as new supply lags demand and ESG “costs” rise. 8) There is another golden age ahead for refining 9) LNG has a much brighter future than oil and 10) Carbon issues are critical, but government goals are not guarantees.

The conference is being held under the theme “Diverse Perspectives: Transitioning Towards a Carbon Constrained World”. MPGC is held with the support of leading industry stakeholders, hosts, speakers and sponsors, which has been nothing short of excellent and we look forward to welcoming all attendees once again at MPGC 2022. MPGC remains the region’s longest annual oil and gas industry gathering, delivering in both the in-person and virtual formats, a high-level and power packed programme that comprises incisive discussion panels with industry visionaries and leaders, audience polls and networking opportunities.

Today, the second day of the conference, there will be debate and dialogue on LNG trading, the refining landscape and the energy transition panel, which will address the prospects for oil and gas ecosystem shifting to a lower carbon future. ADNOC LNG, Shell LNG Marketing, BP IST Middle East, TotalEnergies Gas and Power, Cheniere Marketing, Bapco, Tecnicas Reunidas, Samsung Engineering, Technip Energies, Vitol, and S and P Global Platts are expected to participate.