Saudi Ara­bia sees ro­bust oil fun­da­men­tals

OPEC mar­ket share steady as ri­val out­put falls

Kuwait Times - - BUSINESS -

DOHA: Long-term oil mar­ket fun­da­men­tals re­main ro­bust but pro­longed low prices could threaten se­cu­rity of sup­ply and pave the way for a price spike, Saudi Ara­bia’s vice oil min­is­ter said yes­ter­day.

The world’s largest crude ex­porter will con­tinue in­vest­ing in its oil and gas sec­tor, Prince Ab­du­laziz bin Sal­man said in a speech at an Asian en­ergy con­fer­ence in the Qatari cap­i­tal Doha.

“Sup­ply and de­mand pat­terns in­di­cate that the long-term fun­da­men­tals of the oil com­plex re­main ro­bust,” he said. The com­ments sug­gest OPEC heavy­weight Saudi Ara­bia is sat­is­fied with its strat­egy of not cut­ting pro­duc­tion and al­low­ing low prices to re­duce sup­plies, with­out los­ing mar­ket share to com­peti­tors.

Oil prices, at around $47 a bar­rel, have more than halved since July 2014 on am­ple sup­plies.

The Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries meets to re­view pol­icy on Dec 4. Two other OPEC of­fi­cials yes­ter­day made up­beat com­ments about the 2016 out­look, sug­gest­ing big changes are un­likely. Prince Ab­du­laziz said cuts in oil industry in­vest­ment else­where in the world would lead to a drop in crude sup­plies from non-OPEC coun­tries in 2016 and be­yond that was un­likely to be re­versed. Mean­while, growth in de­mand fu­elled mainly by Asia would re­main strong, though slower than in the past.

“Non-OPEC sup­ply is ex­pected to fall in 2016, only one year af­ter the deep cuts in in­vest­ment,” he said. “Be­yond 2016, the fall in non-OPEC sup­ply is likely to ac­cel­er­ate, as the can­cel­la­tion and post­pone­ment of projects will start feed­ing into fu­ture sup­plies, and the im­pact of pre­vi­ous record in­vest­ments on oil out­put starts to fade away.”

Prince Ab­du­laziz said a pro­longed pe­riod of low oil prices was un­sus­tain­able, warn­ing it could “re­duce the re­silience of the oil industry, un­der­min­ing the fu­ture se­cu­rity of sup­ply and set­ting the scene for an­other sharp price rise”.

“Just as the as­ser­tions, heard a few years ago - that the oil price would reach $200 a bar­rel - were proved wrong, so the re­cent as­ser­tion that the oil price has shifted to a new low struc­tural equi­lib­rium will also turn out to have been wrong.”

CON­TIN­U­ING TO IN­VEST

Oil com­pa­nies around the world have de­ferred some $200 bil­lion worth of projects in­clud­ing com­plex, ex­pen­sive ven­tures that hold huge resources, such as Cana­dian oil sands and deep­wa­ter projects in Africa and south­east Asia. But Saudi Ara­bia ap­pears keen to send a mes­sage to the mar­ket that it is mov­ing ahead with its oil and gas projects.

“As a re­spon­si­ble and re­li­able pro­ducer with a long-term hori­zon, the king­dom is com­mit­ted to con­tinue to in­vest in its oil and gas sec­tor, de­spite the drop in the oil price,” Prince Ab­du­laziz said.

While Saudi Ara­bia sees a ro­bust mar­ket over the long term, OPEC has yet to com­plete a re­view of its long-term strat­egy as mem­bers dis­agree about the need to sup­port a fair price and boost rev­enue, del­e­gates say.

OPEC gov­er­nors - of­fi­cials rep­re­sent­ing the mem­ber coun­tries met last week at the group’s Vi­enna head­quar­ters to dis­cuss the lat­est draft of the long-term strat­egy doc­u­ment.

“We have not yet fin­ished, next year maybe,” said one del­e­gate. “We need more time. It won’t be dis­cussed at the con­fer­ence in De­cem­ber.” —Reuters

DUBAI: Women walk past a US-made F-16 fighter jet dis­played at the Dubai Air­show yes­ter­day in the Gulf Emi­rate. —AFP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.