What Did They Talk About at the Energy Conference in the Capital of Shale Oil and Gas Production?
HOUSTON, TX – March 18, 2019
The energy conference CERAWeek, which gathered more than 4,5000 people in the capital of the "shale revolution" in Houston ended on Friday. Contrary to expectations, it did not talk about oil prices and project economics, but about the “new reality of rivalry” that has unfolded between the types of energy and its producers.
If they're not with us, they’re against us.
The struggle for markets between energy sources and technology has led to a new reality, explained the co-founder of IHS Markit and the organizer of CERAWeek Daniel Yergin. Confirming his words, the conference opened with a geopolitical dialogue session, with a discussion devoted to the role of Russia, China, and Iran in the energy field. All three states, according to the participants, pose a threat to regional stability.
Novatek's Vice-President Mark Jetway, a native of the US, later became distressed about the tone of the expert discussion, which, in his opinion, was “unbalanced.”
“The world needs hydrocarbons, the world needs gas. Why we do not hear the dialogues on the theme of the United States against Qatar or the United States against Australia? Always only the US against Russia!” he said, outraged
Secretary of State Mike Pompeo attempted to answer, partly in response to his question, in his keynote the next day. Addressing the overflowing crowd, Pompeo spoke about the future of US foreign policy regarding energy with examples from his own life.
"When I ran a small oil and gas company, my partners and I listened to the conference halls of our main competitor every quarter, we dreamed to hear there that destroyed their business. However, this did not happen, we were too small a company then,” he said.
The rich resources of oil and gas give the US the right to influence the balance of power in export markets, Pompeo continued.
"We do not want our European allies to be connected to Russian gas in the framework of the Nord Stream 2 project, just as we do not want to depend on oil supplies from Venezuela," he said.
China and Iran also do not fit into the “US energy model,” concluded the Secretary of State.
Two years ago at CERAWeek, the main personality was Russian Energy Minister Alexander Novak, who, with the same crowded hall, spoke about the benefits of investing in the Russian energy industry. This year Novak did not come to Houston, although he was listed in the program. Of all the members of the OPEC + Alliance usually active at such large industry conferences, Houston was visited only by UAE Energy Minister Suheil Mazroui, who focused on alternative energy and climate topics.
Under a ban
The absence of OPEC + ministers at the conference in the context of the preparation of the US anti-cartel law, known as NOPEC, is understandable. In light of the development of this formidable document for the cartel, even the traditional meeting of the Secretary-General of the cartel Mohammed Barkindo with the leaders of American shale mining became just a friendly dinner. Meanwhile two years ago many observers pinned hope on these meetings for rapprochement and even cooperation between the main competitors in the oil market.
Later, Barkindo told reporters that OPEC is very closely monitoring the progress of this document, the “destructive consequences” of which for the market are obvious. BP head Bob Dudley spoke about how such trials against OPEC countries are fraught with huge “unpredictable consequences.” In his opinion, the OPEC policy allows to keep oil prices within reasonable limits for producers and consumers; otherwise, there could be a huge overproduction of oil and a collapse in prices. We have recently written in detail about the development of the NOPEC law.
However, if the NOPEC act is still being considered, the sanctions against the two cartel members, Iran and Venezuela, are already in force. Special Representative of the State Department on Iran Brian Hook said at the conference that the plan to bring Iranian exports to zero would be accelerated, as the oil market is now sufficiently secured by supplies, including from the US. According to him, Iran’s damage from the sanctions has already exceeded $ 10 billion, as "1.5 million barrels of Iranian oil per day went from the market."
Unite and conquer
However, business and technology sessions were held in a more creative tone. The leaders of BP, Shell, Total, Siemens and other leaders of the industry spoke about the importance of transformation in an era of tougher competition.
“Energy should not compete for markets. On the contrary, companies must work together to find solutions for the transition from the use of one energy source to another,” said the president of Total for exploration and production, Arno Breyak.
Maarten Wetselaar, Integrated Gas & New Energies Director, said that even now the company earns more by investing in digital technologies than if it had not invested in them. According to him, the transition to clean fuels will allow Shell to become the world's largest generating company by 2035.
The head of Siemens Joe Kaeser in his speech at CERAWeek called localization and isolation of markets one of the threats of globalization.
“The world is boundless. The internet of things, big data, all this has long erased the boundaries, they do not exist," argued Kaeser.
According to him, the Western world is to blame itself for the problems of pollution and overproduction of energy. “Therefore, third countries are right when, looking at our faces, they say that we are shifting the responsibility for the way the world has done to us,” he concluded.