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Energy efficiency, security urged alongside oil output freeze

Xinhua, February 23, 2016 Adjust font size:

Oil-producing countries were asked Monday to look to greater efficiency, industry security and diversity in energy sources along with the proposed output freeze.

Those will become more important factors given the conditional agreement reached last week among major oil-producing countries to freeze oil production, said Abdalla Salem El-Badri, secretary-general of the Organization of Oil Exporting Countries (OPEC).

"I think this is a first step to see what we can achieve," said El-Badri, referring to the pact between Saudi Arabia, Russia and other producers last week that they will freeze oil output at January 2016 levels if other oil-producing countries follow suit.

There will be another conference of oil-producing countries and OPEC members in June to discuss the freeze further, El-Badri told the IHS CERAWeek conference in Houston, one of the country's top annual gatherings of energy industry leaders.

Fatih Birol, executive director of the International Energy Agency (IEA), asked oil companies to pay attention to oil security.

"Low prices are not good news for oil security," Birol said. "We must use energy more efficiently, pay attention to oil security."

Birol said the lower prices experienced during the last three years represent a cycle dependent on supply and demand that will end as a cycle of higher prices begins.

"We now see more supply than demand," Birol said. "If (a barrel) of oil stays at 30 U.S. dollars for a very long time, it's a problem. The result of low prices are cuts in oil investment."

Birol predicted that oil prices will jump to 80 dollars per barrel by 2020.

He also predicted that shale, which has produced an average of 11 million barrels per day during the past five years, will see an output increase in 2017.

El-Badri stressed the need to diversity energy sources. "We have to find other sources of energy."

But he said that the replacement of fossil fuel will take time since such a large percentage of energy needs are currently met by that source.

"We will have to find replacements for 80 percent of fossil fuels," El-Badri said. "Definitely, liquid gas is replacing coal."

El-Badri predicted that the prices will recover by 2017 with the freeze in place.

IHS CERAWeek is recognized as a leading forum offering insight into the energy future. Endi