Balance of power

"The consumers want security of supply and we don't blame them," said El-Badri. "But at the same time, we would like to see what the future demand for our oil will be, so we can invest and not face shortages.

"If I invest to get additional supply and nobody is using it - some call it excess capacity, we call it idle capacity - it needs to be maintained, you cannot just leave it in the ground. After five or six years you will not find it.

"If OPEC countries don't have security [of demand] then they will use their money somewhere else: they will invest if you use their product. We know security of demand is difficult and we need to co-operate, but that only comes through dialogue. We are talking to the EU, the Chinese and the Japanese, though we've not really spoken with the US yet.

"People say when the price goes up ‘let's increase production', but it's not that easy. It takes two to three months to increase production and the same time to pull it back, if it's not needed."

When asked about the option of fixed-term, fixed-price contracts between producers and consumers, to guarantee the security of demand, El-Badri is clear that these would not be an option.

"I don't encourage fixing prices because of guaranteed demand," he said. "We are not dictating the price, the market is doing that. Oil should be open, should be for everybody; we don't encourage any fixed price [deals]."

Technology & alternatives

El-Badri is keen to promote new technologies, to make the development and use of the world's oil reserves cleaner and more efficient. He sees hydrocarbons as the main source of energy for the ‘foreseeable future', but thinks that oil is currently over taxed.

"I think the time has come to stop burdening the barrel," he said. "[Consumer countries] are buying oil cheaply, but selling it very expensively. They are buying petrol from member countries cheap compared to the price I see at the pump. Instead of just burdening the barrel with more taxes, that money should be used in research to help use oil more cleanly.

"I would like to see far more research being carried out, aimed at mitigating the presence of CO₂ found in fossil fuels as a whole. Such a development would be beneficial for both the oil industry and the world at large. There are adequate reserves to last for the foreseeable future, which justify this kind of research, the efforts and the money.

"I don't think the OPEC countries have the financial and technical capabilities to [develop] clean technology, but we can participate and encourage new developments in clean fossil fuels and oil in particular."

When it comes to alternative fuels, El-Badri says OPEC is open to any suggestions that make the energy markets more stable. In fact, OPEC's World Oil Outlook takes account of the rise of biofuels, but El-Badri urges care when it comes to committing resources to just one alternative.

"First of all, we are not against an energy mix and we encourage other sources of energy to come into the market," he said.

"But it seems to me there is a lot of media coverage and a lot of emphasis on other sources of energy, especially biofuels, as if they will replace oil.

"Of course, in principle, we have no problem. But as we see it, there is no magic solution to replacing fossil fuels. I'm concerned that with all the emphasis on biofuels, and with the subsidies they receive, that we may, after a number years, discover they are not the right source to replace fossil fuels."

El-Badri suggested that OPEC member countries were vulnerable to thinking that another source of energy might be coming into the market, because of the level of publicity surrounding alternatives such as biofuels. He indicated that this may lead some to conclude that demand for their oil may drop, causing a reduction in investment. According to El-Badri, the problem this presents could be future shortages.

"The whole world would be affected," he said. "So we would like this matter to be taken very seriously. We think we should work on clean oil, clean coal and another source of energy; all should be developed together, so the world will not face energy shortages at any time in the future."

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