The International Energy Agency (IEA), the Organization of Petroleum

Exporting Countries (OPEC) and the International Energy Forum (IEF) jointly hosted the second Symposium on Energy Outlooks at IEF Headquarters in Riyadh, on Jan. 23-24.

And this has been a master stroke - in some senses. For the IEA and the OPEC represent two sides of the coin. The raison d'etre of the two organizations is different - if not antagonistic. OPEC was created - to wrest the control of the oil markets from the Seven Sisters. And the IEA was created by the consuming nations, in the aftermath of the 1973 oil crisis, by the likes of Henry Kissinger, basically to counter the producers.

Conceded, over the last few years things have changed considerably. The IEA and the OPEC are no more on the collision course - on each and every issue. They converge too and quite often. And this is a real break from the past.

Yet the fact remains that the two organizations represent different, often clashing, interests. Hence to differ between is nothing - but - normal in some senses.

Yet facts also testify that the two organizations are putting out their respective analyses of events impacting and overtaking the crude markets, virtually at the same moment, every month and every year. Yet both look at things from a little different prism. Hence the deductions often do not match.

And this is why the idea of bringing the two - at the headquarters of the IEFS - created basically to generate producers - consumer dialogue - appears such a timely thing.

First such meeting took place last year - exactly on the same dates - and this time again the two sides were sitting against each other - explaining their thinking process before the other - for their assumptions. This definitely helps in calming the markets and indeed amending where one has made an erroneous assumption to reach a certain conclusion. 

And this is exactly what happened in Riyadh - again - last week. For two consecutive days, experts from the OPEC, the IEA and indeed the hosts the IEFS, discussed threadbare the uncertainties affecting the short, medium and long-term markets. They peeped through their respective telescopes - describing the trends as they saw it.

Also discussed during the meeting was the growing role of non-crude liquids in meeting demand growth; shifting of the geographical structure of demand and indeed production, refining capacity development and methodologies for assessing oil supplies.

On the short term, IEA's and OPEC's short-term reports note that the

European debt problems continue to weigh heavily on the market and oil prices. Uncertainties about the global economic recovery and the health of the financial system have definitely dented the perception about the overall health of the global economy and hence crude demand. During 2011, IEA's and OPEC's reports hence had to continually adjust their demand projections downward.

Nevertheless, despite the uncertainty clouding the global economy, both the organizations - representing the opposite ends of the spectrum - underlined that the demand growth is expected to pick up in 2012, with the IEA projection of growth forecast standing at 1.26 mb/d (IEA) as compared to 1.07 mb/d by the OPEC. Although there is no dearth of analysts, all around, who seem to differ with them on this count. On the supply side too, the IEA and OPEC had to adjust their respective non-OPEC supply projections downward during 2011.

For the medium term, the IEA's and OPEC's reports have somewhat different views. And the difference stems from their assumptions of the economic growth in non-OECD countries. Both the IEA and OPEC expect robust growth in global oil demand over the medium term. However, the IEA global medium term demand projection is higher than the OPEC. Though interestingly, in terms of demand growth, the IEA medium term projection is lower than the OPEC.

On the supply side, the IEA and OPEC both project high growth in the global oil supply over the medium term to meet the projected demand increase. The medium term global oil supply forecasts of the two organizations differed by only 0.8 mb/d by 2015.

Over the long term both, the IEA World Energy Outlook (WEO) and OPEC's World Oil Outlook (WOO), insist that under all scenarios, global primary energy demand would continue to grow, as economies expand, the global population grows and living standards across the world improve. By 2035, both outlooks project world energy demand to be more than 51 percent higher than today. Oil, gas and coal will continue to be the most widely used fuels, and their resources are clearly sufficient to meet global energy demand, accounting for over 80 percent of total energy consumption in 2035, the two organizations underlined in their respective reports.

The experts also noted that for both oil and natural gas, an increasing share of global supply will come from non-conventional sources such as those produced from shale and tight sands formations. Yet both IEA and OPEC expect that oil will continue to be the single largest constituent of primary energy demand throughout most of the projection period, although its share as a proportion of total fuels will fall. However, energy and environmental policies, uncertainties relating to economic growth assumptions and technological change continue to cloud the future picture - one has to underline. And indeed to make a very correct long term projection could be hazardous - professionally.

The IEA and OPEC both are also expecting an increase in OPEC crude

production capacity over the medium term until 2015, but with slightly different assessments of the level of capacity increase. The IEA expects OPEC crude capacity to increase by 2.1 mb/d, from 2010 to 2015 (from 35.7 mb/d to 37.8 mb/d) versus close to 4.0 mb/d by OPEC. Consequently, OPEC foresees a steady increase in OPEC spare capacity over the medium term to reach close to 8.0 mb/d by 2015, not far from the IEA which expects the spare capacity to reach 6.8 mb/d by 2015. According to the IEA report, Iraq will account for 80 percent of the increased capacity, followed by UAE and Angola.

Certainly, both reports foresee an easing of the world oil market in the medium term to 2015 with rising OPEC spare production capacity, OPEC NGLs and non-conventional, and non-OPEC supply. Despite the gaps in their perceptions - both sides don't seem to be wide apart and this is a significant development of the recent years - one can't fail underlining here. Some sort of consensus is finally emerging among the major stake holders - a consoling development of recent years indeed!