The 13th Annual APS Conference: Optimism For Middle East Petroleum.

The 13th Annual APS Conference, Middle East Strategy To The Year 2012, held in Beirut on Oct. 4-6, 1999, was opened by Lebanon's Prime Minister HE Dr. Selim El Hoss. He reviewed some key developments in the world oil market and commented on their political significance and then made specific reference to the position of Lebanon.

HE Mr. Obaid Bin Saif Al Nasseri, the UAE Minister of Petroleum & Mineral Resources, reviewed the current developments in the international oil industry which affected the economy of the Middle East Gulf States. The Middle East holds over 675 million barrels or 65% of total proven crude oil reserves and more than 50 TCM or 35% of world proven natural gas reserves.

The Middle East produces only 30% of total oil crude output and less than 7% of gas production. This demonstrates that there is a disparity between the volumes of reserves available in the region and levels of production. That is to say, the available oil and gas reserves of this region are still underdeveloped compared to other less competitive regions of the world. The development cost of oil reserves in the Middle East region is the lowest in the world. Therefore, the imbalance between low production and high reserves of the region ought to be corrected in future in order to satisfy world oil demand growth and consequently a shift in investment is expected to take place from high cost regions to this highly attractive area.

However, future investments in oil and gas projects are oil price dependent. OPEC's decision to maintain the 1998-1999 Agreements on production cuts until the end of March 2000 was a wise decision built on market fundamentals and should lead to firm crude oil prices. In the longer term, most forecasts indicate a growth in oil demand of around 1.5% per annum in the next 5-10 years, which means that world demand could expand by about another 12mb/d in the coming decade, most of which has to be met from the Middle East region. As for the growth in the demand for natural gas, it is projected that it will grow even faster at about 2.5% per annum in the next decade and the Middle East will have the biggest share in meeting future demand growth for natural gas.

The UAE, with its large proven oil and gas reserves, currently stands third in the world of proven recoverable crude oil reserves, and fourth in the world with its proven natural gas reserves of around 6 trillion cubic meters. Although UAE has the potential to produce higher than its crude oil output of 2 mb/d, this level of production is in compliance with the agreed OPEC production cut.

The UAE will continue to play a major role in the oil and gas markets and this role will be further enhanced in future as the demand for oil and gas from the region is set to expand.