Oil demand uncertainty bad for producers, consumers: OPEC, IEA

Oil demand uncertainty bad for producers, consumers: OPEC, IEA

London (Platts)--22May2006

Uncertainty over the rate of global oil demand growth is a hindrance to
both producing and consuming countries because it complicates efforts to
ensure appropriate investments are made to expand production and refining
capacities, OPEC and the International Energy Agency said in a joint statement
Monday following a workshop in Oslo.

It was difficult to be certain about the exact rate of oil demand growth
for a number of reasons, the statement said, including the changing
relationship between prices, economic growth and demand; the influence of key
demand regions; the pace of technological development; and the likelihood that
governments will introduce more stringent energy and environmental policies.

The OPEC-IEA statement followed the two groups' fourth joint workshop May
19 in Oslo. They said they would hold a fifth event in 2007, focusing on the
rising importance of China and India in global energy markets.

According to the statement, OPEC Acting Secretary General Mohammad
Barkindo told the workshop that supply security would remain a top priority
for OPEC, but added that security of demand was also very important.

"Given the considerable uncertainties that surround today's global
markets, it is of paramount importance that we develop an outlook in the near
to long term," Barkindo told the workshop. "For this reason, a good
understanding of policy developments and their potential impact on the major
demand growth regions is essential for providing a realistic outlook for
demand."

"Security of supply is, and will remain, one of OPEC's top priorities,
along with supporting oil market stability. At the same time, security of
demand is essential and can only be achieved by enhanced cooperation from the
consuming countries," Barkindo said.

IEA Director Claude Mandil said the IEA understood the importance of
accurately forecasting demand. "In today's rapidly evolving markets we must
strive to continue to make the best possible projections using the best
available data as this will improve investment confidence," said Mandil,
according to the statement.

"Achieving this requires constructive dialog between oil producers and
the major consumers," Mandil said, adding that the Oslo workshop constituted
"an important step in this ongoing process."

The workshop in Oslo considered the key issues and uncertainties for
world oil demand over the coming years, the statement noted, adding that its
proceedings would provide valuable input to the IEA's World Energy Outlook
2006, to be released in November.

The workshop was attended by high-level delegates representing the OPEC
and IEA secretariats, as well as senior government officials from OPEC and IEA
member countries, international experts focused on economic and energy
analysis, and senior representatives from international institutions.

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