The twelfth bi-annual Offshore Mediterranean Conference (OMC 15) started in Ravenna, Italy on March 25, attracting 680 exhibiting companies from 23 countries.
The opening session titled ‘Focus on Change: Planning the Next 20 Years,’ chaired by Giuseppe Tannoia, Executive VP for Central and Southern Europe at Eni, offered an insight into short-term and mid-term outlook for the oil and gas industry.
Tannoia said that after a long period of stable and high oil prices, the industry has recently seen a drastic change in its fundamentals, namely a decline in oil demand and prices, a steady increase in the US production, and geopolitical uncertainty in the Eastern Mediterranean and the Middle East.
However, Tannoia said that even though the short-term outlook is negative, the mid-term outlook for the industry looks more promising, as the low price of energy is forecast to increase economic growth.
“If the drop in investment continues, the industry will not be able to counter the decline in existing fields,” Tannoia said. “We will have a situation in the mid-term where we will see an increase in demand, due to the economic growth, with a decrease in supply, due to the cuts in investments and declining production from the existing fields. It is reasonable to assume, therefore, that the oil price will increase in mid-term, even without OPEC’s intervention.”
Tannoia added that already now gas is the fuel for the transition to an economy based on renewables and a less pollutant source. Speaking about the European independence in short and mid-term period, he said that investments are of major importance for creating a positive effect on the national perspectives in the oil and gas industry.
Touching upon the effects of the energy related challenges, the OMC Chairman, Innocenzo Titone said that the development of the unconventional hydrocarbon development, especially in the United States and Canada, has provided high availability of resources which brought about a dramatic drop in oil prices causing a slump in investments. This has also brought about a drop in LNG prices.
Titone said that it was unrealistic for Europe to manage without imports, urging the European Union countries to support domestic production through searching for new resources and maximizing production in the existing reservoirs as a way of improving its energy efficiency and balance diversification of primary energy mix.
The three-day conference will also host a number of technical sessions, with a special attention given to the latest developments in Enhanced Oil Recovery methods (EOR), the latest EU directives for the offshore sectors, as well as the ways of reducing safety and environmental risks.