CERAWeek is an annual energy conference organized by the information and insights Company (IHS) in Houston, Texas. The conference provides a platform for discussion on a range of energy-related topics by the world’s elite energy minds.
The world’s biggest oil exporter took center stage Tuesday at IHS CERAWeek in Houston, as Saudi Arabia oil minister Ali Al-Naimi held court on everything from production cuts (he’s against them) to shale drilling ( he’s for it).
Here’s what we heard from him and the other speakers on Day 2 of the energy conference.
First Cut’s the Deepest
Saudi Arabia won’t cut oil production because it doesn’t trust other countries to share the sacrifice, Al-Naimi said. Instead it will keep output where it is now and let low prices kill off higher cost production. “It may sound harsh, and unfortunately it is, but it is the most efficient way to rebalance markets,” he said.
A War on War
Saudi Arabia’s decision not to cut production shouldn’t be seen as a war on U.S. shale or an attempt to chase greater market share at the expense of other producing nations, Al-Naimi said. “I have no concerns about demand, and that’s why I welcome new additional supplies, including shale oil.”
If the Shirt Fits …
The 81-year-old Al-Naimi drew a laugh from the crowd detailing his career in the oil industry, which began in 1947 when he was an “office boy” at the state-owned oil company, Saudi Aramco. Since that time he’s seen gluts and scarcity, oil at $2 and $147. “I’ve even survived peak oil,” he said. “I think I have a t-shirt somewhere with that on it.”
‘Wall of Cash’
Who’s worried about low oil prices? Not Steve Williams, chief executive officer of Canada’s biggest energy company, the oil-sands producer Suncor Energy Inc. “We’ll be one of the last guys standing at these levels,” Williams said in an interview. “With the kind of assets we have, it’s a wall of cash that just keeps coming at you.”
Shale drillers are “grievously wounded” and are about to be “decimated” in the coming months, said Mark Papa, the former EOG Resources Inc. chief executive officer who helped create the shale industry more than a decade ago. Companies will rise from those ashes with more conservative leadership, and eventually make U.S. shale the leading oil supplier in the world.
Oman to the Rescue
While Saudi Arabia may not want to cut output, its neighbor does. Oman Oil Minister Mohammed Hamed Al-Rumhy said OPEC and non-OPEC producers need to cut production by 5-to-10 percent to stabilize the market. He put his money where his mouth is, pledging to cut 100,000 barrels a day, or about a 10th of the country’s output.